What's the deal with dual Lawsuits Filed March 9?

Update from our legal team meeting this morning. Our lawyers are saying the chilling effect from this designation extends far beyond Anthropic and the companies directly affected.

Their analysis is that if the supply chain risk designation stands, it establishes a template: any time an AI company refuses a government demand, the administration can invoke § 3252 and effectively exile that company from the defense ecosystem. The statute does require a written determination that the action is necessary to protect national security by reducing supply chain risk and that less intrusive measures are not reasonably available, but that determination is a discretionary call by the Secretary of Defense or the Secretary of the Army, Navy, or Air Force, and if the agency limits disclosure of its basis, the statute says no action under that authority shall be subject to review in a bid protest before the Government Accountability Office or in any Federal court.

This is not just an Anthropic problem. This is an industry-wide governance problem.

The hearing being moved from April 3 to March 24 is a very significant signal and I want to explain why.

Federal judges do not accelerate their calendars casually. Judges have full dockets and moving a hearing up by ten days means bumping other matters or adding time to an already packed schedule. A judge does this for one reason: they believe there is a credible risk of irreparable harm that cannot wait.

For Anthropic to get the emergency injunction, they need to satisfy the four-factor test from Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008): (1) likelihood of success on the merits, (2) likelihood of irreparable harm absent the injunction, (3) balance of equities favors the movant, and (4) the injunction is in the public interest.

The fact that the judge expedited the hearing suggests they are at least persuaded on factor two — irreparable harm. Revenue loss that drives customers permanently to competitors, reputational damage from a "supply chain risk" label, and the cascading effect on the contractor ecosystem are all harms that cannot be fully remedied by money damages after the fact.

Factor one — likelihood of success — is where the real fight will be. But the procedural tea leaves favor Anthropic at this stage. Judges who think a case is frivolous do not move hearings up. They deny the TRO application on the papers and let the case proceed at normal speed.

March 24 is going to be one of the most consequential hearings in technology law this decade.

From a government contracts perspective, the FAR (Federal Acquisition Regulation) does have a supply chain exclusion mechanism: FAR Subpart 4.23 implements exclusion orders under the Federal Acquisition Supply Chain Security Act, and an order can name any non-Federal source, including a domestic company. But the statute behind those orders, 41 U.S.C. 1323, requires notice to the named source of the Council's recommendation and 30 days to submit information and argument in opposition, and 41 U.S.C. 1327 sends review to the D.C. Circuit. The existing debarment and suspension procedures under FAR Subpart 9.4 require notice, an opportunity to respond, and a written decision (with written findings of fact where material facts are genuinely disputed). The Pentagon bypassed those notice and response steps by using the 10 USC 3252 designation, which requires a written determination and notice to the congressional committees but does not require advance notice to the excluded company or an opportunity to respond. If Anthropic wins on the due process argument, it could force the government to use the FAR debarment process instead, which would give Anthropic significantly more procedural protections.

For any defense contractors in this thread wondering about compliance obligations while the litigation is pending: the designation remains in effect unless and until the court grants the injunction. Continue to comply with the applicable contract clauses and any binding written direction from your contracting officer. But document everything. Government-directed changes can support a request for equitable adjustment depending on the contract and its changes clause. If FAR 52.243-1 applies, it generally requires the contractor to assert its right to an adjustment within 30 days after receiving the written change order, although the contracting officer may consider a later proposal before final payment.

I've been following this sub-topic closely. The consensus seems to be: document everything, consult an attorney early, and don't sign anything without reading it carefully.