Source: Law Commentary

A federal appeals panel in the District of Columbia Circuit, by a 2–1 vote, affirmed the Pentagon’s national security “supply chain risk” designation that excludes Anthropic’s Claude models from military systems and contracts. Judge Gregory Katsas, joined by Judge Neomi Rao, wrote that the Federal Acquisition Supply Chain Security Act of 2018 authorizes agencies to exclude technology when its design or operation could deny, disrupt, or otherwise affect government systems, and that this statutory language covers risks created by how a product operates regardless of the supplier’s intent. The court emphasized that Anthropic’s embedded safeguards—such as refusing certain uses including fully autonomous lethal weapons and mass domestic surveillance—created uncertainty about Claude’s availability for uses the Pentagon considers necessary.

The D.C. Circuit rejected Anthropic’s claims that the designation exceeded Pentagon authority, was arbitrary, or violated constitutional rights, including a First Amendment retaliation claim; the majority treated Anthropic’s public advocacy as protected speech but concluded the exclusion resulted from the company’s refusal to accept an “all lawful uses” condition. The opinion noted Defense Secretary Pete Hegseth issued the supply chain determination on March 3, finding significant national security risk and deeming less restrictive measures inadequate. Judge Karen LeCraft Henderson dissented, arguing the statute was meant to target hostile or deceptive interference and should not be applied to openly disclosed safety restrictions. A separate August ruling in California had struck down a different Pentagon designation under another statute; that California decision remains operative while the D.C. Circuit’s ruling preserves the separate 2018-based exclusion, leaving Anthropic restricted from certain Pentagon work as the company considers further review.