US court refuses to stay Pentagon’s ‘supply-chain risk’ blacklisting of Anthropic

A federal appeals court in Washington has refused to suspend the Pentagon’s supply-chain risk designation against Anthropic, leaving defense contractors with conflicting legal signals over whether they can continue using Claude, and putting the ruling at odds with a separate federal court that reached the opposite conclusion last month.


“The equitable balance here cuts in favor of the government,” a three-judge panel wrote in its order Wednesday. “On one side is a relatively contained risk of financial harm to a single private company. On the other side is judicial management of how, and through whom, the Department of War secures vital AI technology during an active military conflict.”

The panel, comprising Judges Henderson, Katsas, and Rao, acknowledged that Anthropic “will likely suffer some degree of irreparable harm” but found its interests “seem primarily financial in nature” rather than constitutional.



The order states the ruling is not a final decision on the merits. Oral arguments are set for May 19.


Anthropic had asked the US Court of Appeals for the District of Columbia Circuit to pause the supply-chain risk designation issued March 3 by Secretary of War Pete Hegseth.

The label, according to the company’s court filings, bars it from Pentagon contracts and requires defense contractors to stop using Claude in military work. The court denied the request, conflicting with a US District Court in California that granted Anthropic a preliminary injunction on March 26, blocking a parallel designation under a related statute.


Acting Attorney General Todd Blanche called the ruling “a resounding victory for military readiness” in a post on X. “Military authority and operational control belong to the Commander-in-Chief and Department of War, not a tech company,” he wrote.
Vendor risk is no longer predictable

For enterprises, the split ruling creates a compliance problem with no clean answer. The order states the Department has canceled its contracts with Anthropic, begun removing Claude from its systems, and prohibited contractors from using it as a subcontractor on Pentagon work. It also states, however, that “the Department has not prohibited contractors from using Claude for work performed for entities other than the Department.”

That distinction does not resolve the uncertainty. Following the California injunction, the government filed a compliance status report on April 6, cited in legal analysis by Herbert Smith Freehills Kramer, confirming it had restored Anthropic access across federal systems. That compliance applied only to the California statute. The broader D.C. designation remains active.



Sanchit Vir Gogia, chief analyst at Greyhound Research, said enterprises are dealing with vendor risk that their procurement frameworks were not designed to handle. “It means a vendor does not have a single legal status anymore. It can be restricted under one framework and protected under another, at the same time. That is a very different world from the one enterprise procurement teams are used to operating in,” he said.

https://www.computerworld.com/article/4156534/us-court-refuses-to-stay-pentagons-supply-chain-risk-blacklisting-of-anthropic.html