They deemed them a supply chain vulnerability.

This is the justification for phasing them out and (presumably) not renewing the contract. Happens all the time. Usually with less angry internet posts and more quiet paper pushing.

It’s one of the reasons DoD things can be expensive. DoD contractors aren’t allowed to use the cheap Chinese supplier, for example.

He doesn’t say anything about breaking a signed contract. Simply that Anthropic will be phased out and no longer used by the government.

As a corollary, I doubt Anthropic’s contract will be renewed when the current one expires.

Edit: Grammar

Anthropic took a stance against their AI in weapons and battlefield management systems. The government wants that ability and therefore chose to ban Anthropic as a supplier for government systems.