DC Circuit lets Pentagon keep Anthropic supply-chain risk label

A divided panel of the US Court of Appeals for the District of Columbia Circuit ruled 2-1 on 25 September 2026 to uphold the Pentagon's designation of Anthropic as a supply-chain risk. The decision allows the Pentagon to continue removing Anthropic's Claude models from its systems and to bar the use of its products for Defense Department work, including by contractors.ijr.com+1

The ruling matters because it keeps in place one of two supply-chain designations the government placed on Anthropic earlier in 2026, and it lets the Defense Department steer clear of Claude while Anthropic moves toward a planned initial public offering of its shares. The decision is separate from a California case in which a federal judge found the Pentagon acted illegally.ocregister.com

What the ruling allows

The majority opinion, written by Judge Gregory G. Katsas, held that the Department had 'ample support' for its conclusion that integrating Claude into the department's information systems presented a national-security risk. The judges noted that by Anthropic's own admission, 'the company encodes restrictions into Claude that prevent the model from performing tasks that Anthropic wishes to prevent.'

The judges wrote that the Department reasonably feared Anthropic might manipulate Claude's design to prevent it from performing national-security functions the Department deems contractually authorized and necessary. They said they had 'no reason to doubt' that Anthropic acts with 'noble intentions' in restricting Claude around privacy and AI safety, but that the supply-chain-risk definition hinges on what Anthropic does, not why.

Where the judges disagreed

The majority rejected Anthropic's claims that its due-process and free-speech rights were violated, saying the government followed procedure and that the dispute was standard contract negotiations. The judges wrote that the Pentagon excluded Anthropic based on the company's refusal to assent to a contract term the Department deemed essential, not on the company's support for greater governmental regulation of AI technology.

Judge Karen LeCraft Henderson dissented, making the vote 2-1. Judges Katsas and Neomi Rao, who formed the majority, were nominated by President Trump; Henderson was nominated by Republican President George H. W. Bush. The panel had declined in April to temporarily block the designation after finding Anthropic failed to meet 'stringent requirements' for an immediate reprieve.

A federal judge in San Francisco tossed out one of the supply-chain-risk labels in March and confirmed that decision the following month, ruling the Pentagon acted illegally by punishing Anthropic for its criticism of the Pentagon's views on AI use. The DC case focused on a different rule. The judges said they had 'no quarrel' with the San Francisco conclusions but found that a 'bad motive' is not required for a supply-chain-risk designation.

The parallel California ruling

An Anthropic spokesperson said in a written statement the company 'respectfully disagrees' with the court's decision, adding that 'another federal court has already held the government's parallel designation unlawful' and that the company 'remain[s] confident in our position and [is] considering all options, including further review.' The White House did not immediately respond to a request for comment.

Pentagon spokesman Sean Parnell wrote in a social media post that 'Today's DC Circuit Court ruling completely validates the Department's position.' Anthropic's products are not barred from the federal government as a whole under this ruling, only from Defense Department systems and work. Anthropic had argued the government acted beyond what the supply-chain law allows. The Department of Defense began removing Claude from its workflows earlier in 2026, and the ruling upholds its ability to do so, including prohibiting contractors from using Anthropic products in their work for the department.