Title: A.L. Prime Energy Consultant, Inc. v. Massachusetts Bay Transportation Authority
Citation: N/A
Docket Number: SJC-12370
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: May 2, 2018

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SJC-12370 
 
A.L. PRIME ENERGY CONSULTANT, INC.  vs.  MASSACHUSETTS BAY 
TRANSPORTATION AUTHORITY. 
 
 
 
Suffolk.     January 5, 2018. - May 2, 2018. 
 
Present:  Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, 
& Kafker, JJ. 
 
 
Massachusetts Bay Transportation Authority, Contract.  Contract, 
Termination, Contract clause, Performance and breach, 
Implied covenant of good faith and fair dealing. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
September 6, 2016. 
 
 
A motion to dismiss was heard by Mitchell H. Kaplan, J., 
and a question of law was reported by him to the Appeals Court. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Kevin P. Martin (Joshua J. Bone also present) for the 
defendant. 
 
Michael P. Murphy for the plaintiff. 
 
 
 
LENK, J.  This case concerns the proper construction of the 
termination for convenience clause in a contract between the 
Massachusetts Bay Transportation Authority (MBTA) and A.L. Prime 
2 
 
 
Energy Consultant, Inc. (Prime), a private fuel supplier.  A 
termination for convenience clause permits a contracting public 
entity, under certain circumstances, to cancel a procurement 
contract without exposure to liability for breach of contract.  
See Maxima Corp. v. United States, 847 F.2d 1549, 1552 (Fed. 
Cir. 1988).  Termination for convenience clauses originated in 
Federal procurement contracts, and have given rise to a body of 
Federal case law defining Federal entities' termination rights.  
Some State and municipal procurement contracts also contain 
termination for convenience clauses, but the case law 
interpreting them is sparse.  As a result, some State courts 
have looked to Federal precedent for guidance when construing a 
termination for convenience clause in a State or municipal 
procurement contract. 
We are asked to determine first, whether, in Massachusetts, 
a termination for convenience clause in a State or municipal 
procurement contract should be construed according to Federal 
precedent; and second, if not, whether Massachusetts law permits 
a State or municipal public entity to invoke a termination for 
convenience provision solely to obtain a more favorable price. 
This dispute began when the MBTA terminated the MBTA-Prime 
contract (contract), in order to procure fuel more economically 
through an existing Statewide contract with a different vendor.  
Prime filed a complaint against the MBTA for breach of contract 
3 
 
 
and breach of the implied covenant of good faith and fair 
dealing, claiming that the MBTA's termination must be evaluated 
according to Federal case law.  Prime further argued that, under 
Federal precedent, a public entity may not invoke a termination 
for convenience clause solely to secure a lower price.  A 
Superior Court judge agreed, and denied the MBTA's motion to 
dismiss Prime's complaint.  The judge then granted the MBTA's 
motion to report the case for interlocutory review pursuant to 
Mass. R. Civ. P. 64, as amended, 423 Mass. 1410 (1996), and we 
allowed the MBTA's motion for direct appellate review. 
 
The Federal standard for construing a termination for 
convenience provision in a governmental procurement contract 
departs from the general rule that contracts must be enforced 
according to their plain meaning.  We decline to import this 
Federal case law, which conflicts with Massachusetts precedent 
indicating that basic contract principles determine the proper 
construction of a termination for convenience clause.  We 
conclude that a State or municipal entity may terminate a 
procurement contract for its convenience in order to achieve 
cost savings, where, as here, the contractual language permits, 
and in the absence of contrary applicable law.  As a result, we 
conclude further that the Superior Court judge erred in denying 
the motion to dismiss on the ground that a public entity may not 
invoke a termination for convenience clause in a State or 
4 
 
 
municipal public procurement contract in order to secure a lower 
price. 
 
1.  Background.  We summarize the facts alleged in the 
plaintiff's complaint, Polay v. McMahon, 468 Mass. 379, 382 
(2014), as well as relevant "matters of public record, orders, 
items appearing in the record of the case, and exhibits attached 
to the complaint" (citation omitted).  Schaer v. Brandeis Univ., 
432 Mass. 474, 477 (2000). 
 
In January, 2015, the MBTA issued an invitation for bids to 
supply it with ultra low sulfur diesel fuel (ULSD) for two 
years.  The MBTA's procurement of the ULSD was supported with 
Federal assistance awarded by the Federal Transit 
Administration.  See note 10, infra.  The MBTA attached to its 
invitation for bids the entire contract that the successful 
bidder would sign with the MBTA.  This contract included the 
following provision, entitled "Termination for Convenience": 
 
"Termination for Convenience.  The [MBTA] may, in 
its sole discretion, terminate all or any portion of 
this Agreement or the work required hereunder, at any 
time for its convenience and/or for any reason by 
giving written notice to the Contractor thirty (30) 
calendar days prior to the effective date of 
termination or such other period as is mutually agreed 
upon in advance by the parties.  If the Contractor is 
not in default or in breach of any material term or 
condition of this Agreement, the Contractor shall be 
paid its reasonable, proper and verifiable costs in 
accordance with generally accepted government 
contracting principles as set forth in the Federal 
Acquisition Regulations, including demobilization and 
contract closeout costs, and profit on work performed 
5 
 
 
and Accepted up to the of termination to the extent 
previous payments made by the [MBTA] to the Contractor 
have not already done so.  Such payment shall be the 
Contractor's sole and exclusive remedy for any 
Termination for Convenience, and upon such payment by 
the [MBTA] to the Contractor, the [MBTA] shall have no 
further obligation to the Contractor.  The [MBTA] 
shall not be responsible for the Contractor's 
anticipatory profits or overhead costs attributable to 
unperformed work."  (Emphasis supplied.) 
 
 
In July, 2015, the MBTA awarded the ULSD contract to 
Prime, and agreed that the contract would take effect in 
September of that year.1  July, 2015, also saw the creation 
of the Fiscal and Management Control Board through 
legislative enactment.  See St. 2015, c. 46, §§ 199-208.  
This body is charged with, among other things, securing the 
fiscal stability of the MBTA.  See St. 2015, c. 46, 
§ 200 (f). 
Separately, in May, 2015, the Commonwealth issued a 
request for response (RFR) seeking bids for a Statewide 
supply of ULSD for executive branch agencies.  Dennis 
Burke, Inc. (Burke), was the successful bidder, and 
executed a contract with the Commonwealth in June, 2015. 
 
Almost one year later, in April, 2016, the MBTA told Prime 
that the MBTA could achieve cost reductions by opting into the 
                     
 
1 The Massachusetts Bay Transportation Authority (MBTA) 
initially had awarded the contract to a different bidder.  A.L. 
Prime Energy Consultant, Inc. (Prime), appealed from this 
decision on the ground that it was based on incorrect price 
calculations, and subsequently was awarded the contract. 
6 
 
 
Statewide ULSD contract with Burke.  On July 12, 2016, the MBTA 
notified Prime in writing that it intended to terminate the 
contract, pursuant to the termination for convenience provision, 
effective August 15, 2016.  Later that month, Prime demanded 
that the MBTA rescind its termination of the contract.  The MBTA 
replied in August that its termination was proper, and would 
allow the MBTA to "utiliz[e] economies of scale available 
through the Commonwealth's existing blanket fuel contract," and 
encouraged Prime to submit a termination claim.2 
 
In September, 2016, Prime filed a complaint against the 
MBTA in the Superior Court.  The complaint asserted claims for 
breach of contract and breach of the implied covenant of good 
faith and fair dealing, and sought "compensatory damages, costs 
of suit, reasonable attorney[']s fees, interest, and such 
further relief as the court may deem just and equitable."  
Although Prime's complaint suggests that the MBTA incorrectly 
calculated its potential cost savings, its claims rest on the 
premise that the MBTA terminated the contract in order to secure 
a lower price for ULSD through the Statewide contract. 
In October, 2016, the MBTA moved to dismiss the complaint 
pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974).  
                     
 
2 The record is silent as to whether the MBTA paid Prime the 
reimbursement costs required in the event of a termination for 
convenience, but Prime has not alleged that the MBTA failed to 
provide this payment. 
7 
 
 
In March, 2017, a Superior Court judge denied the motion.  The 
judge's decision was based on Federal case law interpreting 
termination for convenience clauses in Federal procurement 
contracts.  The judge reasoned that, under that precedent, Prime 
could show that the MBTA acted improperly if Prime proved that 
the MBTA had terminated the contract solely to obtain a better 
price from another contractor. 
 
In April, 2017, the MBTA filed a motion for reconsideration 
or, in the alternative, to report the case for interlocutory 
review pursuant to Mass. R. Civ. P. 64.  The judge denied the 
motion for reconsideration but allowed the rule 64 motion.  The 
judge stayed all proceedings in the Superior Court pending 
interlocutory appeal, and reported the following question to the 
Appeals Court: 
 
"May a government agency[3] invoke a termination for 
convenience clause contained in a procurement contract for 
the purchase of goods for the sole reason that it has 
learned of an opportunity to purchase the same goods at a 
lower price from another vendor?" 
 
We allowed the MBTA's application for direct appellate review.4 
                     
 
3 Although the MBTA is a political subdivision akin to "a 
county, a regional school district, or a fire, improvement, or 
incinerator district," see Massachusetts Bay Transp. Auth. v. 
Boston Safe Deposit & Trust Co., 348 Mass. 538, 543 (1965); 
G. L. c. 161A, § 2, we construe the reported question as 
applying to the MBTA.  
 
 
4 Although the trial judge's report takes the form of a 
question of law, we evaluate the propriety of the judge's 
decision denying the MBTA's motion to dismiss.  See Maher v. 
8 
 
 
 
2.  Discussion.  We are asked to determine, as a matter of 
first impression, whether to construe a termination for 
convenience clause in a State or municipal public procurement 
contract according to Federal case law concerning such clauses 
in Federal procurement contracts.  We first discuss this 
precedent, which provides that a court must evaluate whether a 
Federal government entity acted in bad faith or abused its 
discretion in terminating for its convenience.  See, e.g., 
Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1541 (Fed. 
Cir. 1996), cert. denied, 520 U.S. 1210 (1997) (Krygoski).  We 
then compare the Federal standard to our own jurisprudence, 
which indicates that a termination for convenience clause in a 
public procurement contract should be interpreted under "general 
contract principles."  See Morton St. LLC v. Sheriff of Suffolk 
County, 453 Mass. 485, 490 (2009) (Morton St.).  Because the 
State and Federal approaches cannot be reconciled, we conclude 
that Massachusetts law must determine the proper construction of 
a termination for convenience clause. 
 
In this case, the contract unambiguously vests the MBTA 
with the discretion to terminate "for any reason," a phrase 
which necessarily includes the decision to cut costs.  We 
identify nothing in Massachusetts law to indicate that this, 
                                                                  
Retirement Bd. of Quincy, 452 Mass. 517, 522 n.9 (2008), cert. 
denied, 556 U.S. 1166 (2009); Mass. R. Civ. P. 64, as amended, 
423 Mass. 1410 (1996). 
9 
 
 
standing alone, is an impermissible reason to terminate a 
contract for convenience.  Nor does construing the termination 
for convenience provision as written render the contract 
illusory, because the contract required the MBTA to provide 
Prime with valuable consideration, and placed certain 
restrictions on the MBTA's termination right.  As a result, we 
conclude that Prime has not alleged sufficient facts to 
demonstrate that the MBTA committed a breach of the contract or 
the implied covenant of good faith and fair dealing.  The 
Superior Court judge therefore erred in denying the MBTA's 
motion to dismiss on the ground that Prime had not stated a 
viable claim upon which relief could be granted. 
 
a.  Standard of review.  We review an order on a motion to 
dismiss de novo.  See Galiastro v. Mortgage Elec. Registration 
Sys., Inc., 467 Mass. 160, 164 (2014); Shapiro v. Worcester, 464 
Mass. 261, 266 (2013).  Factual allegations are sufficient to 
survive a motion to dismiss if they plausibly suggest that the 
plaintiff is entitled to relief.  Iannacchino v. Ford Motor Co., 
451 Mass. 623, 636 (2008).  Resolution of this case turns on the 
proper construction of the contract before us; this is a 
question of law, which we also review de novo.  See James B. 
Nutter & Co. v. Estate of Murphy, 478 Mass. 664, 667 (2018). 
 
b.  Applicable law.  We first must determine whether to 
construe the termination for convenience provision according to 
10 
 
 
Federal precedent.  Certain background is helpful in 
understanding Prime's argument that Federal law should guide our 
analysis. 
 
In general, a termination for convenience clause permits a 
contracting public entity, under certain circumstances, to 
cancel a procurement contract without exposure to liability for 
breach of contract.  See Maxima Corp., 847 F.2d at 1552.  If a 
public entity properly invokes a termination for convenience 
clause, the contractor is not entitled to common-law damages; 
rather, the remedy is limited to "costs incurred, profit on work 
done and the costs of preparing the termination settlement 
proposal" (citation omitted).  Id.  The concept of terminating a 
procurement contract for the Federal government's convenience 
developed during the Civil War, as a way to avoid military 
procurement costs following the completion of a war effort.  See 
Krygoski, 94 F.3d at 1540.  Congress subsequently enacted new 
legislation governing terminations for convenience after each of 
the World Wars.  See id. at 1541.  By the end of the Twentieth 
Century, the principle had been extended beyond the military 
context, and Federal law required that many Federal procurement 
contracts contain a termination for convenience clause.  See 
id.; 48 C.F.R. § 49.502.  Indeed, Federal regulations now 
provide uniform language for termination provisions that must be 
included in certain Federal procurement contracts, permitting 
11 
 
 
termination when it is "in the Government's interest."  
48 C.F.R. §§ 52.249-1 to 52.249-6.5 
 
Judicial interpretation of this language has evolved along 
with the changes in statutory and regulatory requirements, 
primarily in the United States Court of Appeals for the Federal 
Circuit and the Court of Claims, which was the predecessor to 
the United States Court of Federal Claims.6  See Krygoski, 94 
F.3d at 1541-1544; South Corp. v. United States, 690 F.2d 1368, 
1369 (Fed. Cir. 1982); Torncello v. United States, 681 F.2d 756, 
763-766 (Ct. Cl. 1982).  Following some confusion concerning the 
correct standard, the United States Court of Appeals for the 
Federal Circuit settled that a termination for convenience is 
                     
 
5 The Federal acquisition regulation provides uniform 
termination for convenience clauses for seven different types of 
procurement contracts.  See 48 C.F.R. §§ 52.249-1 to 52.249-7.  
These clauses are distinct from one another, but all contain 
language permitting termination when it is "in the Government's 
interest," with one exception for termination clauses required 
in contracts for architect-engineer services when a fixed-price 
contract is contemplated, which provides that the government may 
terminate "for the Government's convenience or because of the 
failure of the Contractor to fulfill the contract obligations."  
See 48 C.F.R. § 52.249-7.  The United States Court of Appeals 
for the Federal Circuit applied the bad faith or abuse of 
discretion standard in considering the "in the Government's 
interest" language provided by 48 C.F.R. § 52.249-2.  See 
Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1544-1545 
(Fed. Cir. 1996), cert. denied, 520 U.S. 1210 (1997). 
 
 
6 The United States Court of Appeals for the Federal Circuit 
is a specialized court that hears appeals from the United States 
Court of Federal Claims, which has jurisdiction to review 
appeals of most decisions by Federal contracting officers.  See 
28 U.S.C. § 1295(a)(3); 41 U.S.C. § 7104(b)(1). 
12 
 
 
proper so long as a government entity does not act in bad faith 
or abuse its discretion.  See Krygoski, supra at 1541. 
 
The United States Court of Appeals for the Federal 
Circuit's precedent as to abuse of discretion "suggest[s] that 
[the] court will avoid a finding of abused discretion when the 
facts support a reasonable inference that the contracting 
officer terminated for convenience in furtherance of statutory 
requirements for full and open competition."  See id. at 1544, 
citing Caldwell & Santmyer, Inc. v. Glickman, 55 F.3d 1578, 1582 
(Fed. Cir. 1995) (Caldwell), and Salsbury Indus. v. United 
States, 905 F.2d 1518, 1521 (Fed. Cir. 1990), cert. denied, 498 
U.S. 1024 (1991); 41 U.S.C. § 3301(a)(1) (requiring full and 
open competition in procurement by Federal executive branch 
agencies).  See also discussion, infra.  With respect to the bad 
faith standard, in order to succeed on a claim that a 
termination for convenience clause was invoked in bad faith, a 
contractor must overcome the presumption that a contracting 
officer has acted in good faith, by showing "'well-nigh, 
irrefragable proof' that the government had a specific intent to 
injure it."  Caldwell, supra at 1581, quoting Torncello, 681 
F.2d at 770.7  The Court of Federal Claims has explained that 
                     
 
7 The United States Court of Appeals for the Federal Circuit 
has concluded that the requirement for "well-nigh, irrefragable 
proof" approximates the "clear and convincing evidence" 
13 
 
 
"[a] claim for breach of contract based on breach of the implied 
duty of good faith and fair dealing is distinct from a claim for 
breach of contract based on an improper termination for 
convenience" under Federal law.  See TigerSwan, Inc. v. United 
States, 110 Fed. Cl. 336, 345 (2013).8,9 
 
Our own precedent concerning termination for convenience 
clauses in public procurement contracts is far less extensive.  
We have had one previous occasion to construe such a clause.  
See Morton St., 453 Mass. at 486-487.  In Morton St., supra at 
494, we held that where a sheriff lost outside funding to pay a 
                                                                  
standard.  See Am-Pro Protective Agency, Inc. v. United States, 
281 F.3d 1234, 1239-1240 (Fed. Cir. 2002) (Am-Pro Protective). 
 
8 The Court of Federal Claims held in TigerSwan, Inc. v. 
United States, 110 Fed. Cl. 336, 345 (2013), quoting Am-Pro 
Protective, 281 F.3d at 1239-1240, that "[t]o establish a breach 
based on bad faith in this context, a contractor must present 
clear and convincing evidence that the government's termination 
was made with the 'intent to injure' the contractor."  By 
contrast, under Federal common law, "[p]arties can show a breach 
of the implied duty of good faith and fair dealing by proving 
lack of diligence, negligence, or a failure to cooperate."  
TigerSwan, Inc., supra.  "[P]roof of 'bad faith' is not required 
to show a breach of the implied duty of good faith and fair 
dealing in most cases," and "[e]vidence of government intent to 
harm the contractor is not ordinarily required."  Id. at 346.  
But see Austin v. United States, 118 Fed. Cl. 776, 790 (2014) 
(rejecting claim for breach of implied duty of good faith and 
fair dealing against Federal government entity, based on 
conclusion that "the record does not reflect that any government 
official acted with the specific intent to injure plaintiffs"). 
 
 
9 A claim that a Federal public entity has invoked a 
termination for convenience clause in bad faith also is distinct 
from a claim for breach of the implied duty of good faith and 
fair dealing under Massachusetts law.  See discussion, infra. 
14 
 
 
lease, she lawfully could terminate the lease under a 
termination for convenience provision.  We applied "general 
contract principles," looking to the unambiguous contractual 
language and the dictionary definition of "convenience."  See 
id. at 490, 494.  We concluded that "losing the funding for the 
lease is plainly an inconvenience justifying termination" 
because, to continue the lease, the sheriff would have been 
required to reduce or eliminate funding for other obligations.  
Id. at 494. 
 
In Morton St., the parties did not raise, and the court did 
not address, the question whether to import Federal precedent 
when construing a termination for convenience provision.  See 
id. at 490-494.  The court interpreted the termination for 
convenience clause according to "general contract principles."  
Id. at 490.  This approach is consonant with the canon that "in 
general the law applicable to public contracts is the same as 
that applicable to private contracts."  R. Zoppo Co. v. 
Commonwealth, 353 Mass. 401, 404 (1967). 
 
The Federal standard, by contrast, is a gloss that has 
settled on the uniform language found in certain Federal 
termination for convenience clauses, informed partly by Federal 
procurement requirements that have no application to State or 
municipal agencies.  See Krygoski, 94 F.3d at 1544 ("court will 
avoid a finding of abused discretion when the facts support a 
15 
 
 
reasonable inference that the contracting officer terminated for 
convenience in furtherance of statutory requirements for full 
and open competition"); 41 U.S.C. § 3301(a)(1) ("an executive 
agency in conducting a procurement for property or services 
shall . . . obtain full and open competition through the use of 
competitive procedures in accordance with the requirements of 
[the Federal Procurement Policy] and the Federal Acquisition 
Regulation").  The Federal acquisition regulation mandates that 
certain Federal procurement contracts include a termination for 
convenience clause, and provides stock language for them.  See 
48 C.F.R. §§ 49.502, 52.249-1 to 52.249-6.  Non-Federal 
entities, however -- such as the MBTA -- may craft their own 
termination for convenience clauses when drafting procurement 
contracts, because they are not bound by the Federal acquisition 
regulation.  See 48 C.F.R. §§ 1.104, 2.101.  As a result, for 
example, the contract here allows the MBTA to terminate "in its 
sole discretion," and "for any reason," rather than allowing 
termination only where the termination is "in the Government's 
interest." 
 
Our precedent instructs courts to examine how a contract, 
by its plain language, defines the parties' rights.  See 
Schwanbeck v. Federal-Mogul Corp., 412 Mass. 703, 706 (1992).  
The Federal standard, conversely, requires inquiry into whether 
a public entity has abused its discretion or acted in bad faith.  
16 
 
 
Embracing the Federal approach would require Massachusetts 
courts, in construing termination for convenience clauses, to 
apply the meaning that Federal courts have assigned to language 
provided by Federal regulations -- regardless of the specific 
contractual language in front of them.  The Federal standard, 
therefore, cannot be reconciled with "general contract 
principles" provided by Massachusetts law, Morton St., 453 Mass. 
at 490, including the "elementary" axiom that "an unambiguous 
agreement must be enforced according to its terms."  Schwanbeck, 
supra.10 
Prime's argument that, by referencing the Federal 
acquisition regulation, the contract incorporates Federal case 
                     
 
10 Although Prime does not discuss this fact, we note that 
the MBTA's procurement of fuel under section 6.1.1 of the 
contract is supported by Federal funding awarded by the Federal 
Transit Administration (FTA).  The Federal acquisition 
regulation, however, does not apply to procurements conducted 
with Federal assistance by non-Federal entities, such as the 
MBTA.  See 48 C.F.R. §§ 1.104, 2.101; Federal Transit 
Administration, Circular No. FTA C 4220.1F, at 9 (rev. Mar. 18, 
2013) (FTA Circular).  A different Federal regulation instructs 
that contracts supported by Federal funding must include a 
termination for convenience clause, but leaves State and 
municipal recipients of Federal funds free to craft their own 
contractual language.  See 2 C.F.R. Part 200, Appendix II(B); FTA 
Circular, supra at 13.  Compare 48 C.F.R. §§ 52.249-1 to 52.249-
7 (requiring specific language for termination for convenience 
clauses in Federal procurement contracts).  The MBTA's receipt 
of Federal funding does not alter our conclusion that 
Massachusetts law must govern construction of the termination 
for convenience clause.  See Linan-Faye Constr. Co. v. Housing 
Auth. of Camden, 49 F.3d 915, 917, 920 (3d Cir. 1995) (State law 
governs termination for convenience clause in State or municipal 
contract drafted by Federal funding recipient, using forms 
provided by Federal agency, if controlling State law exists). 
17 
 
 
law, is unavailing.  The contract states that, in the event of 
termination for convenience, "the Contractor shall be paid its 
reasonable, proper and verifiable costs in accordance with 
generally accepted government contracting principles as set 
forth in the Federal Acquisition Regulations."  This language 
does no more than provide that, once the MBTA terminates for its 
convenience, Prime's reimbursement is to be determined under the 
principles provided by the Federal acquisition regulation.  See, 
e.g., 48 C.F.R. § 31.205-42 (cost principles in event of 
termination).  The single reference to the Federal acquisition 
regulation does not incorporate the Federal standard for 
interpreting a termination for convenience clause, as Prime 
seems to suggest.  "[T]he scope of a party's obligation cannot 
'be delineated by isolating words and interpreting them as 
though they stood alone.'"  Starr v. Fordham, 420 Mass. 178, 190 
(1995), quoting Boston Elevated Ry. v. Metropolitan Transit 
Auth., 323 Mass. 562, 569 (1949).  The MBTA's power to terminate 
is expressly defined by other language in the termination 
provision; disregarding this language would belie the "general 
rule of contract construction" "that contracts should be 
construed as a whole."  See Polaroid Corp. v. Rollins Envtl. 
Servs. (NJ), Inc., 416 Mass. 684, 690 (1993). 
Neither Prime's additional contention that a termination 
for convenience clause -- construed according to its plain 
18 
 
 
language -- would deprive a contractor of any consideration, nor 
the fact that certain other States have adopted the Federal 
standard, persuades us that we should import Federal precedent 
that would conflict with State law.  Prime suggests that, in 
order to ensure that public procurement contracts provide 
contractors with real consideration, we must adopt the Federal 
standard.  We recognize that Federal case law might represent 
"an effort to [rein] back on the government's non-negotiable, 
statutorily-conferred entitlement to terminate its contracts as 
it pleases."  See Handi-Van, Inc. v. Broward County, 116 So. 3d 
530, 538 (Fla. Dist. Ct. App. 2013).  Public entities, however, 
are constrained by the general contract principle that "a 
promise that binds one to do nothing at all is illusory and 
cannot be consideration."  Graphic Arts Finishers, Inc. v. 
Boston Redev. Auth., 357 Mass. 40, 43 (1970).  A public entity's 
power unilaterally to walk away from a contract, without 
restrictions, therefore would render the contract illusory.  See 
Mb Oil Ltd. Co. v. Albuquerque, 382 P.3d 975, 978 (N.M. Ct. App. 
2016) (government's unlimited right to terminate could render 
contract illusory).11  That is a situation, however, not 
confronting us in the contract at issue here.12 
                     
 
11 We leave for another day the question whether a public 
entity may terminate a contract for its convenience in order to 
rebid the contract in search of a lower price.  See Petricca 
Constr. Co. v. Commonwealth, 37 Mass. App. Ct. 392, 392-397 
19 
 
 
We recognize that some State courts have consulted Federal 
precedent in construing a termination for convenience clause in 
a State or municipal contract.  See, e.g., Krygoski, 94 F.3d at 
1542, 1544; RAM Eng'g  & Constr., Inc. v. University of 
Louisville, 127 S.W.3d 579, 584, 587 (Ky. 2003) (applying now 
defunct Federal standard permitting termination only under 
changed circumstances).  Nonetheless, there is no consensus 
concerning whether or how to apply the Federal standard.  See, 
e.g., Old Colony Constr., LLC v. Southington, 316 Conn. 202, 204 
n.1 (2015) ("Unlike [F]ederal contracts, no [S]tate regulations 
dictate the requirements and obligations attendant to 
termination for convenience in municipal contracts.  As in the 
present case, such obligations generally are dictated by the 
                                                                  
(1994) (G. L. c. 30, § 39M, which allows awarding authority to 
"reject any and all bids, if it is in the public interest to do 
so," did not permit State entity to reject valid bid and 
readvertise procurement contract in order to "recapture the 
benefit of a lower bid that was properly rejected").  In this 
case, the MBTA had the opportunity to contract with a new vendor 
by joining an existing Statewide contract.  Under the 
Commonwealth's regulations for the procurement of commodities or 
services, which the MBTA has elected to follow, see 801 Code 
Mass. Regs. § 21.01(2)(a) (2003), State agencies typically must 
procure goods and services through a competitive process, but 
this requirement does not apply when an agency joins a 
collective purchasing agreement.  See 801 Code Mass. Regs. 
§§ 21.05(5), 21.06 (1997). 
 
12 See discussion, infra, concerning consideration provided 
by the MBTA-Prime contract in the event of termination. 
20 
 
 
terms of the contract").13  Additionally, at least one Federal 
court has held that, where controlling State law exists, a State 
court need not look to Federal precedent construing termination 
for convenience clauses.  See Linan-Faye Constr. Co. v. Housing 
Auth. of Camden, 49 F.3d 915, 917, 920 (3d Cir. 1995). 
In sum, in light of the incompatibility between the Federal 
standard and our own jurisprudence, we are not persuaded that 
Federal law should supplant Massachusetts precedent in 
determining the proper construction of a termination for 
convenience clause in a State or municipal public procurement 
contract.  Having concluded that the termination for convenience 
clause must be construed according to Massachusetts law, we turn 
to Prime's claims against the MBTA. 
 
c.  Proper construction.  i.  Breach of contract.  Prime 
alleges that the MBTA's decision to terminate the contract in 
order to secure a better price or contract terms from another 
vendor "rendered the competitive bidding process meaningless" 
and was a breach of the contract.  In order to determine whether 
                     
 
13 See Mb Oil Ltd. Co. v. Albuquerque, 382 P.3d 975, 978-980 
(N.M. Ct. App. 2016) (discussing Federal standard and plain 
contractual language, and declining to state controlling 
standard); Louis Food Serv. Corp. v. Department of Educ. of the 
City of New York, 76 A.D.3d 956, 958 (N.Y. 2010) (New York law 
permits State government agency to exercise rights under 
termination for convenience clause without judicial inquiry); 4N 
Int'l, Inc. v. Metropolitan Transit Auth., 56 S.W.3d 860, 861-
862 (Tex. Ct. App. 2001) (rejecting Federal standard and 
applying Texas law). 
21 
 
 
Prime has alleged sufficient facts to show that the MBTA's 
termination was impermissible, we analyze the contract according 
to the principle that "[w]hen contract language is unambiguous, 
it must be construed according to its plain meaning."  Balles v. 
Babcock Power Inc., 476 Mass. 565, 571-572 (2017). 
The language of a contract is unambiguous unless "the 
phraseology can support a reasonable difference of opinion as to 
the meaning of the words employed and the obligations 
undertaken" (citation omitted).  Bank v. Thermo Elemental, Inc., 
451 Mass. 638, 648 (2008), and cases cited.  The contract at 
issue vests the MBTA with "sole discretion" to terminate.  "Sole 
discretion" means the "power to make decisions without anyone 
else's advice or consent."  Black's Law Dictionary 565 (10th ed. 
2014).  See Thomas v. Oregon Fruit Prods. Co., 228 F.3d 991, 994 
n.3 (9th Cir. 2000) ("sole discretion" represents "unambiguous 
grant of discretion").  The words "sole discretion" cannot 
reasonably be interpreted in multiple ways.  See Bank, supra.  
They clearly permit the MBTA to terminate the contract 
unilaterally. 
 
The termination provision further provides that the MBTA 
may terminate the contract "for its convenience and/or for any 
reason."  As we concluded in Morton St., 453 Mass. at 494, 
quoting the American Heritage Dictionary of the English Language 
411 (3d ed. 1996), "'convenience' means the 'quality of being 
22 
 
 
suitable to one's comfort, purposes, or needs.'"  Conserving 
resources meets an important need.  See Morton St., supra at 
492, 494 (recognizing "concern about the public fisc" and "many 
challenging decisions that public officials with considerable 
obligations and limited resources often need to make, especially 
during difficult fiscal times, in order to allocate available 
resources more suitably"). 
The word "any" is defined as "one, no matter what one:  
every."  Webster's Third New International Dictionary 97 (2002).  
The phrase "for any reason" thus unambiguously includes the 
MBTA's reason for termination:  achieving cost savings.  See 
Insurance Brokers W. Inc. v. Liquid Outcome LLC., 874 F.3d 294, 
298 (1st Cir. 2017); (phrase "for any reason" is unambiguous); 
Ruiz v. A.B. Chance Co., 234 F.3d 654, 672 (Fed. Cir. 2000) 
(same).  "There is no ambiguity here that would allow a court to 
search for an intent of the parties not to be held strictly to 
the plain terms of the contract language."  Eigerman v. Putnam 
Invs., Inc., 450 Mass. 281, 287 (2007). 
 
Prime argues that, under Morton St., only a funding loss or 
other change of circumstances could justify invocation of a 
termination for convenience clause, but Morton St. contains no 
such limitation.  Indeed, in that case we concluded that 
"challenging decisions" forced by budget constraints may 
motivate a public entity to terminate a contract.  See Morton 
23 
 
 
St., 453 Mass. at 494.  We did not define the full extent of the 
sheriff's discretion in Morton St., because it clearly 
encompassed the sheriff's right to end the lease when she lost 
the financing for that lease.  Id.  The sheriff's circumstances 
were sufficient, but not necessary, to justify termination for 
convenience. 
 
The Legislature's decision to create the Fiscal and 
Management Control Board in order to secure the MBTA's fiscal 
stability indicates that the MBTA's budget is under pressure.  
See St. 2015, c. 46, § 200 (f).  Moreover, the contract language 
in this case contains a broader authorization of discretion than 
was at issue in Morton St., 453 Mass. at 486-487.  In that case, 
the termination provision provided simply that the contract 
could "be terminated at any time for the convenience of the" 
sheriff.  Id.  Accordingly, we considered whether the funding 
loss constituted an inconvenience.  Id. at 494.  Here, by 
contrast, the contract specifies that the MBTA may terminate 
"for any reason"; Prime does not allege that the MBTA terminated 
the contract for no reason at all but, rather, argues that its 
stated reason is improper.14  In sum, Prime has not alleged any 
impermissible conduct or wrongdoing, aside from its contention 
                     
 
14 As noted, although Prime's complaint asserts that the 
MBTA incorrectly calculated its potential cost savings, the 
complaint does not allege that the MBTA's stated reason for 
terminating the contract concealed another, illegitimate one. 
24 
 
 
that the MBTA could not terminate the contract in order to 
secure a lower price.15 
 
Finally, construing the termination clause as written does 
not, as Prime argues, render the contract unenforceable for lack 
                     
 
15 In its brief, Prime suggests that the MBTA's decision to 
terminate the contract runs afoul of Massachusetts public 
bidding laws that are aimed at fostering equitable competition.  
We observe that, as a recipient of Federal assistance, the MBTA 
both must comply with applicable State law and must ensure that 
"procurement transactions be conducted in a manner providing 
full and open competition."  2 C.F.R. §§ 200.318(a), 200.319(a).  
Prime, however, has alleged no statutory or regulatory 
violations that occurred during the process by which the 
contract at issue here, or the Statewide ULSD contract, was 
awarded.  On the facts provided, we have no reason to conclude 
that these procedures did not comply with applicable law, and, 
accordingly, must enforce the contract as written.  Contrast 
Phipps Prods. Corp. v. Massachusetts Bay Transp. Auth., 387 
Mass. 687, 692 (1982) (contract was unenforceable where MBTA did 
not comply with statutory public bidding requirements). 
 
 
To the extent that Prime argues that the contract, 
construed according to its plain language, is unenforceable as 
contrary to the public policy of treating bidders fairly and 
equally, we reject this claim.  "'Public policy' in this context 
refers to a court's conviction, grounded in legislation and 
precedent, that denying enforcement of a contractual term is 
necessary to protect some aspect of the public welfare."  Feeney 
v. Dell Inc., 454 Mass. 192, 200 (2009), and cases cited.  
Although "[w]e have repeatedly stated that the purpose of 
competitive bidding statutes is not only to ensure that the 
awarding authority obtain the lowest price among responsible 
contractors, but also to establish an open and honest procedure 
for competition for public contracts," Modern Continental 
Constr. Co. v. Lowell, 391 Mass. 829, 840 (1984), terminating a 
procurement contract in order to secure a lower price does not 
conflict with this purpose.  If a contract clearly defines the 
public entity's right to terminate, the bidders are equally on 
notice of such a possibility.  Furthermore, the Legislature has 
encouraged State agencies to join cooperative purchasing 
agreements.  See G. L. c. 30B, § 23.  As explained supra, the 
MBTA's termination was consistent with this court's precedent. 
25 
 
 
of consideration.  The contract here bound the MBTA to provide 
certain valuable consideration to Prime.  See Graphic Arts 
Finishers, Inc., 357 Mass. at 43 ("The law does not concern 
itself with the adequacy of consideration; it is enough if it is 
valuable").  In addition to payment for ULSD, the contract 
guaranteed Prime thirty days' written notice and reimbursement 
for certain costs in the event of termination.  See 3 R.A. Lord, 
Williston on Contracts § 7:13 (4th ed. 2008) (consideration 
exists when reservation of right to cancel requires written 
notice).  Compare Torncello, 681 F.2d at 769-770 ("a route of 
complete escape vitiates any other consideration furnished," 
where no notice or additional payment was provided).  The MBTA's 
termination does not render the contract illusory.  See Simons 
v. American Dry Ginger Ale Co., 335 Mass. 521, 525 (1957) 
(contract construed as terminable at will on reasonable notice 
was not illusory prior to termination).  For these reasons, we 
conclude that Prime has not alleged sufficient facts to state a 
claim for breach of contract. 
ii.  Breach of the implied covenant of good faith and fair 
dealing.  Prime's complaint also asserts that the MBTA 
terminated the contract "in order to undercut the [c]ontract 
price set through the competitive bidding process, thereby 
depriving Prime of the fruits of the [c]ontract," and therefore 
committed a breach of the implied covenant of good faith and 
26 
 
 
fair dealing.  The MBTA's broad latitude under the contract does 
not immunize it against such an allegation.  See Robert & Ardis 
James Found. v. Meyers, 474 Mass. 181, 189 (2016) (covenant of 
good faith and fair dealing is implied in every contract). 
 
"The covenant of good faith and fair dealing . . . provides 
'that neither party shall do anything which will have the effect 
of destroying or injuring the right of the other party to 
receive the fruits of the contract.' . . .  'A breach occurs 
when one party violates the reasonable expectations of the 
other'" (citations omitted)  Weiler v. PortfolioScope, Inc., 469 
Mass. 75, 82 (2014).  "There is no requirement that bad faith be 
shown; instead, the plaintiff has the burden of proving a lack 
of good faith. . . .  The lack of good faith can be inferred 
from the totality of the circumstances."  Robert & Ardis James 
Found., 474 Mass. at 189, quoting Weiler, supra.  See Anthony's 
Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 473-474 (1991) 
(rejecting argument that, because trial judge did not find "bad 
faith," he erred in ruling that defendant violated implied 
covenant of good faith and fair dealing). 
 
Prime has not alleged sufficient facts to show that the 
MBTA's decision to terminate "injured" its right to "receive the 
fruits of the contract," which, as discussed, included payment 
for ULSD delivered, as well as thirty days' written notice and 
reimbursement for certain costs in the event of termination.  
27 
 
 
Nor do Prime's allegations state a claim that the MBTA violated 
its "reasonable expectations."  "The plaintiff cannot have 
misunderstood the broad discretion on the part of" the MBTA.  
Eigerman, 450 Mass. at 289.  "Any expectation otherwise on the 
plaintiff's part, as [a] matter of contract law, would not be 
reasonable."  Id.16 
 
On the facts provided, this is not a case in which one 
party leveraged its discretion to "recapture opportunities 
forgone on contracting" or "to refuse 'to pay the expected costs 
of performance.'"  See Anthony's Pier Four, Inc., 411 Mass. at 
473, quoting E.A. Farnsworth, Contracts § 7.17 (a), at 329 
(1990).  Nor has Prime claimed that the MBTA entered into the 
contractual relationship without intending to continue it for 
the full term, compare K.G.M. Custom Homes, Inc. v. Prosky, 468 
Mass. 247, 254-255 (2014) (party who had no intention of 
completing contract committed breach of implied covenant of good 
faith and fair dealing), or asserted that the MBTA's stated 
reason for terminating the contract concealed an illegitimate 
                     
 
16 Prime contends, in addition, that the obligation of good 
faith imposed by the Uniform Commercial Code (U.C.C.) is 
applicable here.  For the reasons discussed, the MBTA has not 
violated this obligation.  See G. L. c. 106, § 1-304; Knapp 
Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 72 F.3d 190, 199 & n.3 
(1st Cir. 1995), cert. denied, 517 U.S. 1245 (1996) (combining 
common law and statutory good faith analyses); official comment 
to U.C.C. § 1-203, 1 U.L.A. 273 (Master ed. 2012) ("This section 
does not support an independent cause of action for failure to 
perform or enforce in good faith . . . [and] does not create a 
separate duty of fairness and reasonableness"). 
28 
 
 
one.  See T.W. Nickerson, Inc. v. Fleet National Bank, 456 Mass. 
562, 571 (2010); Fortune v. National Cash Register Co., 373 
Mass. 96, 104-105 (1977) (employer acts in bad faith by 
terminating employee in order to deprive him or her of 
commission). 
 
Simply put, "the implied covenant of good faith and fair 
dealing cannot create rights and duties that are not already 
present in the contractual relationship."  Eigerman, 450 Mass. 
at 289.  Under the terms of the contract, terminating to obtain 
a better price, alone, is not a violation of this duty.  Prime 
has not alleged sufficient facts to prove that the MBTA 
committed a breach of the implied covenant of good faith and 
fair dealing. 
3.  Conclusion.  We construe the reported question as 
asking whether the MBTA's motion to dismiss properly was denied.  
We conclude that the Superior Court judge erred in denying the 
motion on the ground that a public entity may not invoke a 
termination for convenience clause in a public procurement 
contract in order to secure a lower price.  The matter is 
remanded to the Superior Court for further proceedings 
consistent with this opinion. 
 
 
 
 
 
 
 
So ordered.