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Poof There it Is: Court Invokes the Constructive Termination for Convenience Doctrine for the Government

Client Alert | 1 min read | 11.18.20

In JKB Solutions and Servs., LLC, the Court of Federal Claims denied the contractor’s breach claim and held that the Government constructively terminated the contract for convenience. At issue was an Army contract to provide instructors for the Army’s Operation Contract Support program. The contract required JKB to perform 14 classes per task order, but the Army ordered fewer than 14 classes for all three task orders. In the motion to dismiss stage, the Court rejected the Army’s argument that the contract unambiguously required the Army to pay for only the services it ordered. The court instead found on the merits that the Army constructively terminated the contract for convenience and, therefore, did not breach it, even though the Army did not actually terminate the contract for convenience. In invoking the constructive termination for convenience doctrine on behalf of the Army, the Court found that (1) the Army did not act in bad faith by constructively terminating the contract because the Army never explicitly invoked the doctrine (the Court did) and (2) the Army could have invoked its right to terminate under the circumstances. The Court also ruled that since JKB did not submit a termination for convenience settlement proposal or ask for termination costs in its complaint, JKB was not entitled to recover any costs.

While this case appears to be an outlier in the longstanding termination for convenience jurisprudence, particularly those principles that preclude invocation of constructive termination for convenience in certain circumstances—e.g., after the performance period ends, or in order to circumvent an otherwise alleged breach—contractors should take caution in similar circumstances. When the Government breaches its ordering/payment obligations by reducing the scope of work, and depending on the extent of the reduction, contractors should promptly consider whether to request an equitable adjustment for a deductive change, or submit a termination for convenience settlement proposal to preserve the ability to recover termination settlement costs.

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Client Alert | 4 min read | 03.25.26

NAIC Intensifies AI Regulatory Focus: What Health Insurance Payors Need to Know

The National Association of Insurance Commissioners (NAIC) is intensifying its oversight of how insurers use AI — and the pace of regulatory activity shows no signs of slowing. Over the past several months, the NAIC has published a formal Issue Brief staking out its position on federal AI legislation, launched a multistate AI Evaluation Tool pilot aimed at examining insurers’ AI governance programs, and continued to expand adoption of its AI Model Bulletin across state lines. These developments continue a trend towards enhancing regulation; the NAIC adopted AI Principles in 2020 and a Model Bulletin in 2023 clarifying that existing insurance laws apply to AI systems and establishing expectations for governance, documentation, testing, and third-party oversight. That Model Bulletin has now been adopted in approximately 24 states....