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 Code of Federal Regulations (Last Updated: October 10, 2024)
 Title 2 - Grants and Agreements
 Subtitle A - Office of Management and Budget Guidance for Grants and Agreements
 Chapter II - Office of Management and Budget Guidance
 Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
 Subpart E - Cost Principles
 General Provisions for Selected Items of Cost

  § 200.433 - Contingency provisions.  

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  • § 200.433 Contingency provisions.

    (a) Contingency is that provisions are part of a budget estimate of future costs (typically of large construction projects, IT systems, or other items as approved by the Federal awarding agency) which is are associated with possible events or conditions arising from causes for which the precise outcome of which is indeterminable at the time of estimate , and that experience shows will are likely to result, in the aggregate, in additional costs for the approved activity or project. Amounts Contingency amounts for major project scope changes, unforeseen risks, or extraordinary events may must not be included in the budget estimates for a Federal award.

    (b) It is permissible for contingency amounts other than those excluded in paragraph (a) of this section to be explicitly included in budget estimates , to the extent they are necessary to improve the their precision of those estimates. Amounts Contingency amounts must be estimated using broadly-accepted cost estimating methodologies, specified in the budget documentation of the Federal award, and accepted by the Federal awarding agency. As such, contingency amounts are to be included in the Federal award. In order for actual costs incurred to be allowable, they must comply with the cost principles and other requirements in of this part (see also §§ 200.300 and 200.403 of this part); , be necessary and reasonable for proper and efficient accomplishment of project or program objectives, and be verifiable from the non-Federal entityrecipient's or subrecipient's records.

    (c) Payments made by the Federal awarding agency to the non-Federal entity's to a recipient's or subrecipient's “contingency reserve” or any similar payment made for events the occurrence of which cannot be foretold with certainty as to the time or intensity, or with an assurance of their happening, are unallowable, except as noted in §§ 200.431 and 200.447.

    [78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13, 2020]