MnDOT Policies

Safe Harbor Program Procedures

For Safe Harbor Overhead Rate Policy #FM023

Effective Date: May 26, 2022

Print Procedures (pdf)

Program Enrollment

To enroll in MnDOT’s Safe Harbor Program:

1. Complete the Safe Harbor Program Questionnaire and the Consultant Certification Form.
2. Provide a copy of the questionnaire, certification form, and supporting materials to Consultant Services.

Note: Consultants in the Safe Harbor Program are still subject to all pre-award and post-award audit requirements.

Program Requirements

1. Consultants must certify their intent and commitment to actively work with an accountant or bookkeeper to establish an accounting system, using QuickBooks or similar software. Consultants will work toward accomplishing specific requirements to establish the following:
   • An accounting system that segregates indirect (overhead) costs from direct (project) costs.
   • An accounting system that segregates allowable and unallowable costs for overhead, as defined in Part 31 of the Federal Acquisition Regulation (FAR) and segregates direct labor and indirect labor.
   • Training for accounting personnel and key management on FAR Part 31 requirements to ensure compliance.
   • A written internal control policy and procedure manual that addresses compliance with FAR Part 31.
   • Annually prepared financial statements including an income statement and a balance sheet to assist in the calculation of an overhead rate.
2. The income statement (e.g., Profit & Loss Schedule, Schedule C, or 1120S Tax Return) must:
   • Track expenses with multiple line items of cost detail for each type of expense.
   • Separate expenses into “allowable costs” and “unallowable costs” according to the Federal Acquisition Regulation (FAR Part 31.205).
   • Segregate expenses between indirect costs (overhead) and direct project costs.
   • Segregate direct labor from indirect labor.
3. Consultants must establish their accounting system within two (2) years of enrollment in the Safe Harbor Overhead Rate Program.
   • The consultant must use their accounting system to breakout expenses, complete the Overhead Package, and submit an overhead estimate to MnDOT as soon as the overhead rate is established and no later than the end of the second year.
   • When the actual cost overhead rate has been approved for use by the MnDOT Office of Audit, the consultant will be removed from the Safe Harbor Overhead Rate Program and the Office of Audit will issue an official pre-award audit report.

Definitions

Consultant

An individual or firm providing engineering and design-related services as a party to a contract with a recipient or subrecipient of Federal assistance (as defined by 2 CFR §200.86 and 2 CFR 200.93 respectively).

Engineering and Design-related Services

1. Program management, construction management, feasibility studies, preliminary engineering, design engineering, surveying, mapping, or architectural-related services with respect to a highway construction project subject to 23 U.S.C. 112(a) as defined in 23 U.S.C. 112(b)(2)(A); and
2. Professional services of an architectural or engineering nature, as defined by State law, which are required to or may logically or justifiably be performed or approved by a person licensed, registered, or certified to provide the services with respect to a highway construction project subject to 23 U.S.C. 112(a) and as defined in 40 U.S.C. 1102(2).