The provision formalizes the authority the Department of War used against Anthropic, three months after canceling the company’s $200 million contract.
President Trump signed memorandum NSPM-11 on June 5, directing national security agencies to terminate contracts with AI vendors that repeatedly restrict how the government can use their systems. The provision codifies the authority the Department of War used to cancel Anthropic’s $200 million contract in March, after the company declined to permit unrestricted government use of its Claude models.
Agencies can terminate AI vendor contracts for imposed restrictions
Section 3(b) of the memo directs agency heads to terminate contracts with any AI company that repeatedly restricts government use of its systems. The memo specifies termination “for default or for convenience,” meaning the government doesn’t need to prove a breach. If an agency determines a vendor’s usage policies conflict with NSPM-11, it can end the contract without establishing fault.
That standard addresses the Anthropic dispute directly. In March, the Department of War terminated its contract with Anthropic after the company declined to accept terms requiring “any lawful use” of its models. Anthropic voiced concerns that its models could be used for mass domestic surveillance and fully autonomous weapons and wanted assurances neither would happen. The Pentagon designated the company a supply chain risk, ordered removal of its products from all defense systems within 180 days, and canceled the $200 million contract.
The rule has an escape valve. Agency heads can keep a restricted vendor relationship active for up to one year if cutting ties would create an immediate national security gap. Each exception must be reported in writing to the National Security Advisor and the President’s top science advisor within 30 days.
Agencies now need to use multiple vendors
Section 4(a) directs agencies to diversify their vendor base within 120 days, so they hold active contracts with multiple vendors at once. The directive is a direct response to what happened when the Department of War canceled Anthropic’s contract: agencies had no contracted backup. OpenAI stepped in quickly, but NSPM-11 makes spread-vendor contracting a formal requirement going forward.
NSPM-11 rescinds a previous Biden Administration memorandum, NSM-25. The Secretary of War has 90 days to rewrite the Pentagon’s rules on AI in weapons systems. Those rules, set out in DOD Directive 3000.09, govern when and how AI is used in lethal operations, including the conditions under which a human must remain in the decision loop. The revised directive will align those rules with NSPM-11’s requirements and is subject to annual review as AI capabilities advance. A classified annex covering sensitive security matters is expected within the same 90-day window.
The Anthropic case that prompted the memo’s central provision remains in litigation. A California federal court blocked the supply chain risk designation in March, ruling the action was punitive rather than security-based. The D.C. Circuit denied Anthropic’s emergency request to lift the designation in April. The lawsuit continues in both courts.
