D.C. Circuit upholds Pentagon's decision to exclude Anthropic from supply chain
D.C. Circuit Upholds Pentagon's Decision to Exclude AI Provider Anthropic due to Supply-Chain Risk
On September 25, 2026, the U.S. Court of Appeals for the District of Columbia Circuit, in a split decision, upheld the Department of Defense's decision to exclude Anthropic and its Claude model from department systems and contractor support work. The dispute arose because Anthropic refused to allow the government to use Claude for "all lawful purposes," citing restrictions on lethal autonomous weapons and mass surveillance of Americans; in March 2026, Secretary of Defense Pete Hegseth determined these guardrails constituted a supply chain risk under FASCSA. The majority opinion, written by Judges Gregory Katsas and Neomi Rao, held that FASCSA focuses on what a supplier does rather than its motives, that Anthropic's intentional training of Claude to refuse certain tasks can fall within that definition, and rejected its First and Fifth Amendment claims. Judge Karen LeCraft Henderson dissented, arguing the statute targets deliberate subversion by adversaries, not transparent, good-faith restrictions by suppliers.
The D.C. Circuit Court of Appeals ruling brings supplier restrictions on model behavior within FASCSA supply chain risk; federal contractors can use this to review their AI dependencies and subcontracting chains.