You have to distinguish between political rhetoric (“woke”) and the substance of the dispute
The substance: traditionally, defense contracts don’t have clauses in them limiting what the military can do with the acquired technology. If Boeing or Lockheed Martin or Northrop Grumann sell a missile system to the Pentagon, they don’t try to impose contractual limits on who the Pentagon can fire the missiles at. Now, for some types of contracts - e.g. contracts to provide personnel - the Pentagon is used to contractual terms limiting uses - but not for hardware or software used in weapons systems / military planning / etc.
Along comes Anthropic, who argue AI is a fundamentally different technology, to which the old rules shouldn’t apply - they want contractual terms prohibiting certain uses (autonomous weapon systems without human in loop; domestic mass surveillance). The Biden admin buys the argument and agrees to those novel contractual terms. The Trump admin takes over and objects to them, demands they be renegotiated. I think it was primarily a matter of principle and power-“software vendors don’t get to tell us what we can and can’t do”-rather than some immediate plan to do things the contract prohibits.
OpenAI negotiated a contract which replicated those terms-but with the proviso that the terms only apply insofar as they reiterate existing legal limits. Anthropic was objecting to that as a meaningless fudge-“we promise not to do X if X is illegal” is very weak, especially when contracting with the government-Congress could change the law tomorrow, or the government’s lawyers could change their interpretation of it, or an appellate court decision could impose a new understanding of it.