Why Did the COFC Think a Contract to Provide Instruction Services to the Military Was a Commercial Items Contract?

The contract was for instruction services. The contractor claimed the government breached. The government said it terminated for convenience. The contract included the termination clause for commercial items contracts. Thus, the government could only terminate for convenience if the contract were for commercial items. Although the contract appeared to be for non-commercial services, the COFC found it was, in fact, a commercial items contract. 

JKB Solutions and Services, LLC v. United States, COFC No. 19-1390 

• Claim – The contractor had an IDIQ contract to provide instruction services to the Army. The Army placed three task orders under the contract. But the Army only paid the contractor for the classes taught, not those ordered. The contractor filed suit in the COFC alleging the Army breached by not paying for the classes ordered. The COFC dismissed, finding the Army had constructively terminated the task orders for convenience. 
• Federal Circuit – The contractor appealed to the Federal Circuit. The Federal Circuit vacated the decision. A court can only apply the doctrine of constructive termination when a contract has an applicable termination clause. The contract in this case incorporated the termination clause for commercial items contracts. But the contract at issue was a services contract. The Federal Circuit held that the commercial items termination clause could not apply to constructively terminate a services contract. The Federal Circuit remanded and instructed the COFC to consider whether a termination clause had been incorporated by the Christian doctrine or whether constructive termination for convenience applies. 
• Issue on Remand – On remand, the COFC noted the Federal Circuit had assumed the contract was a services contract because the Army had not contested that issue. But now, on remand, the Army contested the issue—it argued the contract was a commercial items contract. Because the Army now contested the issue, the COFC needed to determine whether this was a contract for services or commercial items. 
• Contract Was Commercial Items Contract – The COFC found the contract was a commercial items contract. The contract was on the form for commercial items contracts. It explicitly incorporated the FAR provisions for commercial items. The contractor argued the services—instructing military personnel—were non-commercial. The court disagreed. The contract’s objective was to acquire instructor services and not to acquire a particular type of instructor services used on non-commercial applications. That the contractor only provided services to the government did not make those services non-commercial 
• Christian Doctrine – Under the Christian doctrine, a court may insert a clause into a contract by operation of law, which is mandatory and expresses a deeply ingrained strand of public procurement policy. Even if the contract were not a commercial items contract, the court found that it could insert the termination clause for fixed-price contracts under the Christian doctrine. The contract was a fixed-price contract that should have included the fixed-price termination clause. Moreover, termination for convenience is a deeply ingrained strand of public policy. Thus, the contract had a termination clause via the Christian doctrine. The Amry could thus constructively terminate for convenience.

The contractor is represented by William A. Lascara and Bryan S. Peeples of Pender & Coward P.C. The government is represented by Amanda L. Tantum of the Department of Justice and Dana J. Chase and Adam Hill of the Army. 

–Case summary by Craig LaChance, Senior Editor