Government Contracts Update: Department of War/Anthropic Dispute and Downstream Implications for Contractors
The Department of War’s (“DoW”) dispute with Anthropic continues to evolve. Should you, as a government contractor, change your relationships with Anthropic or its products as a result? To recap the story: Two weeks ago, DoW designated Anthropic, a major provider of AI tools, including the only AI tool cleared for classified systems, as a supply chain risk following a breakdown in negotiations over contractual use restrictions on Anthropic’s Claude model. This marked the first time a U.S.-based company has ever been designated a supply chain risk. A few days prior, DoW considered using the Defense Production Act to ensure preferred access and potentially compel changes to Anthropic’s products. After the designation, the President instructed federal agencies to stop using Anthropic technology, and DoW statements implied contractors should not engage commercially with Anthropic . Multiple legal commentators questioned whether the Department’s actions exce...