Appeals Court Upholds Pentagon Exclusion of Anthropic From Contracts

A U.S. Court of Appeals in Washington, D.C., ruled 2-1 on Friday, Sept. 25, 2026, that the Trump administration may exclude Anthropic from Pentagon contracts. The March 2026 designation of Anthropic as a national security supply chain risk canceled its military contracts and barred other Pentagon contractors from using its technology. Claude was reportedly used during the January operation that captured and deposed Venezuelan leader Nicolas Maduro. The conflict began in February when Anthropic refused Pete Hegseth's demand to remove restrictions on fully autonomous lethal weapons and mass domestic surveillance. In an opinion by Judge Gregory Katsas, the majority said: "The Secretary raises the deeply sobering prospect of overly constrained AI models shutting down unexpectedly and thus causing important military operations to fail." The court rejected Anthropic's due-process, First Amendment, and retaliation claims, concluding the company received notice and a chance to challenge and that the exclusion stemmed from refusal of a contract term the department considered essential. Hegseth and Trump publicly accused Anthropic of endangering American lives with ideological posturing. An Anthropic spokesperson said it "respectfully disagrees with the decision" and is considering options including further review. A federal judge in San Francisco, Rita Lin, last month struck down a parallel designation and blocked a government-wide ban. Anthropic heads toward a highly anticipated IPO.