Actively handicapping a product that's otherwise capable qualifies.
No, it doesn't. The military doesn't have a right to force product requirements and terms of use on companies they contract with.
If they don't like the contract terms, they can simply not sign a contract and not do business with a company. Trying to get them designated a supply-chain risk is just political retribution.
But they're not actively handicapping it. They're saying it would be wildly irresponsible to assume it's "otherwise capable".
And very critically: they have taken zero steps to "actively handicap" it in any way.
The converse does not qualify. If I advertise a chemical with an admixture that prevents it from being used to make explosives, the military has absolutely no right to demand that I produce a version of that chemical without the admixture. Selling a product which can't do what the DoD wants does not make me a supply chain risk, no matter how easy it would be for me to make a different product that's fit for their purpose.
Say everyone had something to sell and DOD wanted to buy it. But some people wouldn't make the product changes DOD demanded. Now, they are the adversary of the DOD?
I hear Trumplandia is nice this time of year.