Contingencies included in estimates of future costs, on the other hand, are allowable under limited conditions. To be allowable, the contingency must meet both of the following criteria
- based on current conditions and
- the impact is foreseeable within reasonable limits
If the contingency is based on known or unknown conditions and the impact cannot be measured accurately enough to provide equitable results to the contractor and to the Government, the costs are unallowable. An example of this kind of contingency might be pending litigation.