Kelley disusses the covenant, and how the NPP stresses the oneness of the covenant in 1st century Judaism, but misses a critical distinction. Sanders’ focus on “Covenantal Nomism,” is correct in a sense that this was indeed a proper way to understand the law covenants, it was never Israel’s true hope. Quoting Michael Horton, he makes a great point that while covenantal nomism may indeed reflect the posture of 2nd Temple Judaism, we can say 2nd Temple Judaism was wrong and in conflict with the covenantal perspective of the NT.
Dunn, like the NPP generally, has room for only a single covenant. Since it must be primarily gracious, elements that seem to suggest a different kind of covenant (a conditional law-covenant) must be assimilated. I do not doubt that this approach generally fits Second Temple Judaism. In fact, the conflation of these two covenants (and therefor of law and gospel) is precisely the focus of the Pauline Critique.
I think this is a great point, although I hestitate to follow Horton’s program in full.