But compared to what - if Anthropic's models aren't perfect but still better than existing (old school) models, it's understandable DoW still wants to use them (since they're potentially the best available, despite imperfections). I think Hegseth is saying to Anthropic: "that's our call, not yours".
But surely if Anthropic thinks there's a risk that their models might make bad decisions, and the resulting civilian or etc deaths are blamed on them, it's their right to refuse to sell it for that purpose? That's why they had those restrictions in the contract to begin with. How can they be forced to provide something?