A federal judge in California has ruled for Anthropic in its challenge to the Pentagon’s decision to designate the AI company as a supply-chain risk, concluding the government’s action was unlawful and effectively preventing the blacklisting from taking hold. The dispute puts a spotlight on one of the most consequential fault lines in modern procurement law: how far the government can go in invoking national-security concerns to cut off a contractor — or potential contractor — from federal business.

At the center of the case is the Defense Department’s asserted authority to restrict access to the federal marketplace based on perceived risk.