Appeals court lets Pentagon keep Anthropic on the supply-chain blacklist

A federal appeals court in Washington on Friday upheld the Pentagon’s designation of Anthropic as a supply-chain risk in a 2-1 ruling, refusing to second-guess the Trump administration, WIRED‘s Paresh Dave reports Sep. 25.

That label is the Defense Department’s legal tool to kick a vendor out of military systems and contractor work. The majority wrote the department had ample support for concluding that continued integration of Claude into Pentagon information systems, by the department or its contractors, presented a “statutorily covered national-security risk.”

As Anthropic admits, the company encodes restrictions into Claude that prevent the model from performing tasks Anthropic wishes to block. Defense Secretary Pete Hegseth framed that refusal as a significant national-security risk.

A San Francisco federal judge tossed one supply-chain risk label in March and confirmed that decision last month. Friday’s ruling means the other stays in place indefinitely, so the Pentagon’s blocking of Anthropic can continue.

CNBC‘s Ashley Capoot adds that Judge Gregory Katsas wrote the majority, joined by Judge Neomi Rao, both Trump appointees. Judge Karen LeCraft Henderson, appointed by George H.W. Bush, dissented.

Anthropic signed a $200 million Pentagon contract in July 2025. Talks on Claude for GenAI.mil collapsed that September after the department wanted unfettered access across all lawful purposes and Anthropic wanted assurance against fully autonomous weapons and domestic mass surveillance. Hegseth accused Anthropic of trying to “seize veto power over the operational decisions of the United States military.”

The majority said the Pentagon “excluded Anthropic from its supply chain based on the company’s refusal to assent to a contract term that the Department deemed essential, not based on the company’s support for greater governmental regulation of AI technology.”

Spokesperson Danielle Cohen said the company remains confident and is considering all options, including further review by a broader DC Circuit panel or the Supreme Court. The appellate panel delayed immediate effect so Anthropic can petition the same panel for rehearing or seek an en banc rehearing, meaning the full appeals court would rehear the three-judge panel.

The durable filing into Anthropic’s IPO-path week is the parallel-track split. San Francisco tossed one designation, and the DC Circuit just kept the second. Anthropic’s weapons and surveillance refusal is now a lasting vendor kickout under the surviving federal label.

Both labels still face years of appeals.