Pentagon's ouster of Anthropic accelerates contracts for small AI rivals across defense industry

Pentagon's Growing Rift with Anthropic Creates Openings for Small AI Rivals

Small artificial intelligence startups focused on the defense industry are experiencing an unprecedented surge in attention from generals, combatant commanders, and investors following the Pentagon's ouster of Anthropic, its once-favored AI vendor. After the Department of Defense deemed Anthropic's products a "supply-chain risk" in March and the two sides became embroiled in a lawsuit, companies like Smack Technologies and EdgeRunner AI report a dramatic shift in opportunities that seemed unimaginable just months earlier1

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. The falling-out has forced the Pentagon to confront its heavy dependence on one AI provider and accelerate efforts to diversify its AI providers across military branches2

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Tyler Sweatt, CEO of Second Front, a company that helps technology firms meet requirements for secure Pentagon networks, described the impact bluntly: "We've seen a massive increase in demand from customers and the government to get AI solutions fielded since Anthropic was declared a supply-chain risk"3

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. In late March, a judge temporarily blocked the Pentagon's blacklisting of Anthropic, but the momentum shift for smaller competitors continues.

Accelerated Contracts Transform Startup Timelines

The clearest evidence of this post-Anthropic acceleration comes from Smack Technologies, a 19-person startup based in El Segundo, California. The company won a contract with the Marine Corps in March 2025 and delivered a successful prototype by October—software that compresses a months-long operational planning process into roughly 15 minutes. Despite this achievement, full production had been budgeted for fiscal year 2027, meaning October 2027 at the earliest. Momentum stalled through the 2025 holiday period and into early 2026.

Then the Anthropic uproar occurred. Within weeks, Smack was invited to multiple meetings with the Marine Corps focused on one question: how fast can this move into production this year? Andrew Markoff, co-founder and chief executive of Smack Technologies, said there was "very specific guidance and movement and energy" toward getting the prototype ready for combat operations in 2026—an acceleration of more than a year2

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. The military has told Markoff: "We want more, we want demos, let's talk about how we can move faster"3

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Defense Contracts Unlock Broader Opportunities

The shift extends far beyond individual military contracts. Smack holds contracts with the Navy and Air Force, and Markoff said interest came in nearly immediately from U.S. Special Operations Command and other branches. EdgeRunner AI, which is deploying with Army Special Forces groups and received a contract with the Space Force, described a similar experience. Tyler Saltsman, co-founder and chief executive of EdgeRunner AI, had been waiting more than a year for a Space Force contract to clear the Pentagon's procurement machinery. It was signed within weeks of the Anthropic situation breaking into the open. "I can't prove that the Anthropic drama sped this up," Saltsman said, "but I have a sneaky suspicion it did"2

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For these small AI rivals, military contracts represent more than immediate revenue. A defense contract can lead to more business with other branches of the U.S. government and serves as a useful signal of trust and safety for potential commercial clients3

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. Investors who previously showed no interest are now approaching these startups, recognizing the validation that comes with Pentagon partnerships.

Race to Higher Security Clearances Intensifies

Both EdgeRunner and Smack are racing to get their systems operating at higher security classification levels—the gateway to the most operationally significant use cases and the largest military contracts. EdgeRunner said the military has told the company it can reach IL-6, a security designation enabling access to secret and top-secret data, within three months—a timeline Saltsman described as remarkable, given that the process normally takes 18 months or longer. The acceleration is being driven partly by pressure from Pentagon leadership to cut through procurement bureaucracy. The Navy has dramatically sped up engagement with EdgeRunner, with meetings that had been biweekly or monthly now happening multiple times a week2

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A Pentagon official stated that "the Pentagon will continue to rapidly deploy frontier AI capabilities to the warfighter through strong industry partnerships across all classification levels"3

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. One Pentagon technologist previously told Reuters that the realization that the Defense Department was heavily dependent on one AI provider forced the department to act decisively on diversification. For the defense industry, the Anthropic fallout signals a fundamental shift in how the Pentagon approaches AI procurement—prioritizing resilience and competition over convenience and consolidation.