Eye on Policy

Acquisition remains tied to advancement by the government. Regardless of the era, mainframe COBOL to artificial intelligence, the government works hard to keep up. Now a heavily engaged Defense Department has developed a love-hate relationship with the artificial intelligence industry. That has led to dire consequences for one big player and a distortion of law and regulation for everyone.

And it all plays out while the department incurs casualties from the campaign in Iran using the very systems with the potential to benefit from AI. It has implications for every agency, civilian or military, which could have a mission involving controversial actions or novel approaches. Immigration and Customs Enforcement, the Internal Revenue Service, Veterans Affairs, and elements of the Justice Department come to mind immediately.

The major players in the generative AI industry seem attracted to the high profile and high dollar values of Pentagon work. But its CEO solons seem squeamish that military planners and the armed services might deploy AI technology to help find and kill enemies.

Axios and the Wall Street Journal have led the reporting on the increasingly rancorous impasse between Defense Secretary Pete Hegseth and Anthropic CEO Dario Amodei. Amodei, echoed by competing CEO Sam Altman of OpenAI, does not want his products used for mass surveillance or for weapons systems that fire autonomously. In the latter case, he insists a human must stay in the loop of lethal decisions.

It came to head late last week with the Pentagon deeming Anthropic a supply chain risk and doing business with OpenAI instead, for work in classified settings. Oddly, OpenAI said it has the same restrictions in place. Elon Musk’s Grok is also angling to get in on things, although Grok had earlier been proscribed by the General Services Administration (GSA).

What is more, in a capital-letter-laden Truth Social post, President Trump,
directed “EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic’s technology…We don’t need it, we don’t want it, and will not do business with them again!” He added that agencies would have six months to extricate themselves from contracts with Anthropic.

DoD policy in fact for some time has stopped short of deploying fully autonomous fire power, at least until military leaders are confident of the auditability and explainability of autonomous systems’ actions. So, the company and the DoD, rather than talking at cross purposes, could have figured this out—notwithstanding that the Pentagon is not conducting mass surveillance of the U.S. nor using purely autonomous weapons.

Unknown is whether the replacement companies’ technologies are as capable as Anthropic’s. Presumably, the Pentagon had a reason for choosing Anthropic in the first place.

But the spread of the dispute to a governmentwide ban announced in incendiary language? That is unprecedented. To make sure it does not get in the back door, the GSA said it would remove Anthropic from its Multiple Awards Schedule.

Other companies have faced governmentwide bans, notably Huawei. That is company’s Chinese provenance clearly presented a national security threat. It was not personal. Otherwise, the government already has potent tools for non- or under-performing contractors: cure letters, debarment and suspension, and cancellation at the government’s sold discretion.

At least for the time being, contractor executives must choose carefully how they express their politics (and where they contribute). They must choose carefully whether they want to try and dictate how the government uses their products. Neither the basis for the ban, nor the way in which Trump expressed it, nor the ban itself are legal, much less proper under the acquisition regulations and the tenets of good administration. They push politics into procurement. But that is the way it is now.

Elsewhere in procurement…

If you look at other places in the government technology scene, things appear more normal.
In one case, the GSA was able to award a replacement contract before the existing one expired. It made awards to 43 vendors in what it called Phase One of the Alliance 3 governmentwide acquisition contract. As Federal News Network reported, the solicitations first went out in 2024, and Alliant 2 expires in 2028.
Meanwhile, the State Department got 48 contractors over the line for its $10 billion Evolve indefinite delivery, indefinite quantity program. The difference here is that State has been working on this deal since 2022. It was delayed by protests, but now it looks as if the department will proceed.

In a cheery post on LinkedIn, Deputy Veterans Affairs Secretary Paul Lawrence said the long-troubled electronic health record will soon deploy at 13 sites this year. The project launched in 2018, early in the first Trump administration. Now, after eight years, it is getting past a series of expensive false starts. VA “reset” three years ago. And the VA’s inspector general, in its report for 2025, named the EHR project as a major challenge.

The IG noted hundreds of “outages, severe degradations, and functionality issues” at five sites where the system has already deployed. We will see if the system is more functional now.