I'm not a lawyer, but I can't understand how the government could possibly win this lawsuit. If they did, it would mean the government could hold their ability to cut off any company by just declaring them a supply chain risk over any company that they want to bully. That precedent would dramatically change the calculus for doing business with the US government. Why would you try to negotiate terms if the government could just screw you over at any moment? It's one thing to cancel a contract, it's another to blocklist your company altogether.