‘Extraordinary circumstances’: Pentagon could carve out exceptions to Anthropic AI ban amid legal battle

The US Pentagon has told its senior leaders that it may continue to use Anthropic's AI tools beyond the six-month phase-out period, according to a report by Reuters. The report comes at a time when the hostilities between Anthropic and the US government are peaking, with the Claude maker filing a lawsuit against the Trump administration over its designation as a supply chain risk.

According to an internal March 6 memo signed by Pentagon Chief Information Officer Kirsten Davies and seen by Reuters, exemptions to Anthropic may be granted "in rare and extraordinary circumstances" and “will only be considered for mission-critical activities directly supporting national security operations where no viable alternative exists.”

Any Pentagon unit seeking to bypass the Anthropic ban must submit a comprehensive risk mitigation plan for official approval.

Reportedly, the memo directed officials to remove Anthropic's products from systems supporting critical missions like nuclear weapons and ballistic missile defense.

It is also said to have reaffirmed that the ban on Anthropic extends to defence contractors. The memo gives Pentagon contracting officers 30 days to notify contractors and then certify full compliance by the 180-day deadline.

Anthropic's fight against Pentagon:

Meanwhile, Anthropic has sought a stay from a US appeals court following the Pentagon's designation of it as a ‘supply chain risk’. The company claimed in court that the designation could cost it billions of dollars.

"By Anthropic's best estimate, for 2026, the government's adverse actions risk hundreds of millions, or even multiple billions, of dollars in lost revenue," Anthropic's lawyer said in court.

"The federal government retaliated against a leading frontier AI developer for adhering to its protected viewpoint on a subject of great public significance — AI safety and the limitations of its own AI model — in violation of the Constitution and laws of the United States," the company added.

Meanwhile, the AI startup also got support from over 30 OpenAI and Google employees who filed a motion in the case in support of the startup.

“The government’s designation of Anthropic as a supply chain risk was an improper and arbitrary use of power that has serious ramifications for our industry,” the employees said in a brief.

Tech giant Microsoft also filed its own motion in support of Anthropic. The company stated that the Pentagon's designation of Anthropic would have “negative ramifications for the entire technology sector and American business community.”

"This is not the time to put at risk the very AI ecosystem that the Administration has helped to champion," it added.