Not true, limitations on subcontracting (or at least limiting it to approved subcontractors) are allowed and common. Just because he’s a contractor doesn’t mean NDAs are meaningless.
Limiting work to people with security clearances is an example of ok limitations. Adding so many limits that the acceptable people to do work are the single contractor means youve jaut made a constructive way to get around hiring a person as an employee
your statements are unsupported. It is my observation that you are stating spirit of law to your understanding, but not what occurs in law or practice.