A $200 million contract between Anthropic and the Department of Defense collapsed last week after both sides could not agree on the extent of the military’s access to Anthropic’s artificial intelligence. Following the DoD’s subsequent agreement with OpenAI, it appeared the military’s engagement with Anthropic had ended. However, recent reports indicate that Anthropic’s CEO, Dario Amodei, has reopened discussions with Pentagon official Emil Michael.

These renewed negotiations are said to focus on reaching a compromise that would define how the Pentagon can continue using Anthropic’s AI models. Securing a new deal would be unexpected, given the intense friction between the parties. Still, a compromise remains appealing for both sides: the Pentagon already depends on Anthropic’s technology, and a sudden shift to OpenAI’s systems would be disruptive.

The disagreement originated when Amodei raised concerns over a clause permitting the military to use Anthropic’s AI for any lawful purpose. He insisted the company would not allow its technology to be used for domestic mass surveillance or autonomous weapons and sought clearer prohibitions in the contract. After Anthropic declined to agree, the DoD pivoted and finalized a deal with OpenAI.

Since then, individuals on both sides have openly expressed their frustrations. Michael labeled Amodei a “liar” with a “God complex.” Amodei, in a memo reportedly sent to Anthropic staff this week, criticized the DoD and OpenAI CEO Sam Altman, describing the OpenAI agreement as “safety theater” and the messaging around it as “straight up lies.”

Amodei wrote in the memo, “The main reason [OpenAI] accepted [the DoD’s deal] and we did not is that they cared about placating employees, and we actually cared about preventing abuses.” Defense Secretary Pete Hegseth has threatened to designate Anthropic a “supply chain risk,” which would effectively blacklist the company from working with any firm that does business with the U.S. military—though he has not yet taken legal action to enforce this.

Such a designation is usually applied to foreign adversaries, and it is uncertain whether it would withstand a legal challenge.