D.C. Circuit Anthropic Ruling Could Chill Contractor Speech

Government Contracts attorney Amy Fuentes was quoted in Law360 examining the U.S. Court of Appeals for the District of Columbia Circuit's decision to uphold the U.S. Department of Defense's exclusion of artificial intelligence (AI) company Anthropic from its supply chain under the Federal Acquisition Supply Chain Security Act (FASCSA). In its ruling, the D.C. Circuit agreed with the DOD's broader interpretation of the word "manipulate" in FASCSA regulations to conclude the government reasonably designated the company as a supply chain risk.

Amy described the uncertainty now facing defense contractors as agencies request certifications concerning Anthropic products before the DOD posts an order officially implementing the restriction. She also addressed the compliance pressure extending to subcontractors, including certification forms from prime contractors that can impose broader diligence expectations than federal acquisition rules require. Amy advised companies to review their solicitations, contracts and written communications from contracting officers to determine which requirements currently apply.

"The bottom line is that agencies are acting as though contractors should already be reacting to the FASCSA order, but they haven't taken the formal contractual steps through mods that would actually make it binding on contractors. But that binding mechanism is also a way for contractors to recover costs through the modification and [request for equitable adjustment] process," she said, cautioning contractors "not to rush into removal at your own cost without some type of protection."

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