Anthropic Pentagon Blacklisting Upheld by Appeals Court
Anthropic Pentagon Blacklisting after a D.C. Circuit ruling lets the Defense Department exclude Claude from Defense systems, raising procurement risk.
KEY TAKEAWAYS
- D.C. Circuit upheld the Pentagon's designation, allowing the Defense Department to exclude Anthropic's Claude from its systems.
- The decision bars Defense Department contractors from using Anthropic products in department work.
- Ruling preserves procurement barriers and prolongs reputational and contracting uncertainty for Anthropic.
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Anthropic (P-ANTH) lost an appeal on Sept. 25, 2026, when a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit upheld the Pentagon’s blacklisting of the company. The ruling allows the Defense Department to continue excluding Anthropic’s Claude models from its systems and to bar contractors from using them in department work.
Appeals Court Ruling and Impact
The D.C. Circuit ruled 2–1 against Anthropic in its challenge to the Pentagon’s designation of the company as a national-security supply-chain risk. This decision permits the Defense Department to maintain its exclusion of Claude models from its systems and to prohibit contractors from using Anthropic products in Defense Department work. The ruling does not extend to a government-wide ban on Anthropic products.
No verified Securities and Exchange Commission filing or company financial disclosure has quantified the ruling’s revenue impact.
Legal Basis and Reactions
The Pentagon based its designation on Section 4713 of the Federal Acquisition Supply Chain Security Act of 2018, which addresses risks such as sabotage, introduction of unwanted functions, data extraction, and other manipulations that could threaten procurement and supply-chain security.
The court’s majority accepted the department’s concern that Anthropic might encode restrictions into Claude that would prevent it from performing tasks the department considered lawful, contractually authorized, and necessary for national-security operations. Reports indicate negotiations broke down after Anthropic resisted removing contractual limits on uses including lethal autonomous warfare and mass surveillance of Americans.
The panel rejected Anthropic’s due-process and First Amendment claims, finding the department provided prompt notice and an opportunity to contest the exclusion. The court held the department acted because Anthropic declined an essential contractual term, not because of the company’s views on AI regulation.
Judge Gregory G. Katsas wrote the majority opinion, joined by Judge Neomi Rao. Judge Karen LeCraft Henderson dissented. Katsas and Rao were appointed by President Donald Trump; Henderson was appointed by President George H. W. Bush.
A separate federal judge in San Francisco ruled that a broader government designation was unlawful. The D.C. Circuit majority said it did not dispute that ruling but distinguished the Pentagon’s Washington designation, holding that a finding of improper motive was unnecessary for the department’s action there.
Anthropic said it “respectfully disagrees,” remains confident in its position, and is considering further review. A Pentagon spokesman said the ruling validated the department’s position.
By sustaining the Pentagon’s authority under Section 4713, the decision preserves procurement barriers that may limit Anthropic’s access to Defense Department contracts and prolong reputational and contracting uncertainty for the company.
