They're not allowed to use it for military work, precisely so that the military supply chain cannot be broken by an unaffiliated private contractor acting at its own behest.

The Federal government often imposes terms on its contractors that specify what sub-contractors are allowed to do, including "flow down" requirements that ensure these terms are themselves enforced recursively all the way down to leaf suppliers.

None of those amount to a ban, after all private companies are also able to do the same thing, and often do. E.g. when Apple requires its suppliers to pursue clean energy efforts as in https://www.apple.com/newsroom/2023/09/apple-advances-suppli...