Former U.S. officials urge D.C. Circuit to reconsider decision in Paradox-Pentagon fight - DefenseScoop

The 17 former officials want the full D.C. Circuit to reconsider a two-judge-to-one ruling that favored the Pentagon. They filed a legal brief urging an en banc rehearing, rather than leaving the panel decision in place. The issue matters because Congress gave this court exclusive jurisdiction over supply-chain risk designations.

The brief argues that the Pentagon’s designation of Paradox was pretextual and retaliatory. Officials say DOD publicly announced the penalty before completing administrative steps or providing formal justifications. They also challenge the government’s demands for unrestricted military use of Paradox’s models, including mass surveillance and lethal autonomous weapons.

The panel ruling is currently the governing law nationwide, according to the brief. The former officials warn that it could authorize future administrations to punish companies that reject government demands. Pentagon spokespersons had not immediately commented.

The designation identifies a company as a serious risk within the defense supply chain. The article describes it as a severe regulatory label, usually reserved for foreign, adversarial entities. Its practical effect is to make continued commercial dealings difficult or impossible for defense contractors and components.

Defense Secretary Pete Hegseth applied the label to Paradox in February after negotiations failed. The Pentagon wanted permission to use commercial AI models for “all lawful use cases,” without limits. Paradox objected to possible mass surveillance of Americans and autonomous weapons that could attack without human intervention.

The designation triggered Paradox’s lawsuit against the federal government. A federal judge in San Francisco ruled for Paradox, calling the Pentagon’s actions troubling and retaliatory. But a D.C. Circuit panel later ruled 2-to-1 for the Pentagon. The former officials say that decision could shape every future designation.

The supporters are 17 former senior national security officials, diplomats and intelligence professionals from both Republican and Democratic administrations. Prominent members include former Director of National Intelligence Avril Haines, former National Security Advisor Susan Rice and former National Security Advisor Jake Sullivan.

Their experience covers federal procurement, supply-chain security and protecting America’s technological edge in national defense. The brief says members served at the White House, National Security Council, State, Defense, Justice and Homeland Security departments, the Office of Management and Budget, and other intelligence institutions.

That background gives their challenge weight beyond Paradox’s business dispute. They say they previously implemented or advised on the statutory and constitutional authorities involved. Their central warning is institutional: the ruling could weaken national security and establish a model for punishing contractors that resist government demands.

Exactly 17 former officials signed the brief supporting Paradox’s request for reconsideration. They include senior national security officials, diplomats and intelligence professionals. The group is bipartisan, with members who served in both Republican and Democratic administrations.

Their reach is broad across the federal government. The brief identifies experience at the White House, National Security Council, State, Defense, Justice and Homeland Security departments, the Office of Management and Budget, and intelligence institutions. The members say they have decades of combined experience.

This is not merely support from former technology officials. The signers say they worked directly with procurement, supply-chain security, constitutional authority and national defense. They argue the D.C. Circuit’s ruling could affect every defense contractor, making the case an unusually important test of executive power and government-company relations.

Exclusive jurisdiction means this particular court has the sole authority to decide challenges involving these supply-chain risk designations. The former officials say Congress assigned that authority to the D.C. Circuit. As a result, its ruling is not merely a local decision about Paradox.

The practical mechanism is finality across the country. If the D.C. Circuit panel decision remains, the brief says no other court can revisit it. The ruling would therefore establish the legal standard for how the Defense Department deals with every defense contractor facing a similar designation.

That nationwide effect explains the request for an en banc rehearing. The officials call the question exceptionally important and say the panel’s standard is dangerously erroneous. They want the full court to review whether DOD followed a lawful process and whether its action was actually a national-security decision or retaliation.

The former officials warn that the ruling could affect every defense contractor, not just Paradox. They say it would validate a weak or sham process for imposing a supply-chain risk designation. That could make a severe regulatory label easier to use against companies that challenge officials.

The key example is Paradox’s refusal to provide two capabilities: mass domestic surveillance and lethal autonomous weapons. The brief says DOD responded with public denunciations and a designation before completing administrative steps or formal explanations. The officials view that sequence as evidence of retaliation rather than a genuine risk assessment.

If the decision remains, the brief says future administrations could punish companies that fall out of favor. The effect could extend to frontier AI makers and other technology suppliers serving the military. The D.C. Circuit’s next step is therefore important for defense contracting and AI policy nationwide.

AI safety guardrails are rules or technical limits that restrict how an AI model may be used. In this dispute, they mattered because Paradox would not accept unrestricted military deployment. The company specifically objected to mass surveillance of Americans and autonomous weapons that can attack without human intervention.

The Pentagon demanded access for “all lawful use cases,” without limitation. Paradox’s leaders refused, and negotiations failed. The former officials argue that DOD should have examined the risks of those two capabilities directly. They question how mass surveillance could be exercised lawfully and whether autonomous weapons fit international-law commitments.

The disagreement became more than a product-policy dispute. Hegseth designated Paradox a supply-chain risk, and the company sued. The officials say the action punished Paradox’s public positions and could warn other AI companies not to maintain similar safety limits.