Appeals Court Upholds Pentagon’s Supply-Chain Label Against Anthropic in 2-1 Decision
In a 2-1 ruling on September 25, 2026, the DC Circuit said the Pentagon had ample support to treat Anthropic’s Claude as a national-security supply-chain risk. The decision keeps one designation in place indefinitely.
A federal appeals court in Washington, DC, ruled on September 25, 2026, that the US Department of Defense can continue to block Anthropic’s Claude AI models from military and federal government systems, dealing the company a significant legal setback.
The DC Circuit Court of Appeals, in a 2-1 decision, declined to overturn one of two supply-chain risk designations the Pentagon placed on Anthropic earlier this year. The majority found that the Defense Department “had ample support for its conclusion that the continued integration of Claude into the department’s information systems presented a statutorily covered national-security risk.”
The dispute stems from Anthropic’s refusal to allow its AI models to support autonomous weapons or domestic surveillance — a stance Secretary of Defense Pete Hegseth deemed a significant national security risk. The Pentagon responded by sanctioning Anthropic under a pair of supply-chain laws, requiring the removal of Claude from military and federal systems. The court found the government had not violated Anthropic’s due process or free speech rights, ruling that the Pentagon “excluded Anthropic from its supply chain based on the company’s refusal to assent to a contract term,” not based on its views on AI regulation.
The two supply-chain designations were challenged in separate courts. A federal judge in San Francisco struck down one of the labels, but Friday’s ruling keeps the other in place indefinitely. Both decisions face the prospect of years of additional appeals.
Anthropic spokesperson Danielle Cohen said the company remains confident in its position and is considering all options, including appealing to a broader panel of the DC Circuit or the US Supreme Court.
The ruling could affect Anthropic’s business ahead of a potential initial public offering expected later in 2026. The company previously said the designations cost it revenue due to customer concerns, though it has since reported growing sales. The Pentagon has not provided detailed updates on its progress replacing Claude with alternatives including SpaceX’s Grok, Google’s Gemini, or OpenAI’s GPT models.