Earlier quoted context omitted.
Not a lawyer, but the NSF clause covering clawbacks is pretty specific: > NSF reserves the right to terminate financial assistance awards and recover all funds if recipients, during the term of this award, operate any program in violation of Federal antidiscriminatory laws or engage in a prohibited boycott. A "prohibited boycott" is apparently a legal term aimed specifically at boycotting Israel/Israeli companies, so…
I don't think you are misunderstanding the surface requirements, but I think you are mistaking “would eventually, with unlimited resources for litigation, prevail in litigation over NSF cancelling funds, assuming that the US justice system always eventually produces a correct result” with “not at risk”.
Interestingly, they may get more in donations than they would have from this grant, so maybe that needs to be including in the risk estimate as well...