You can argue that the government refusing to do any business with company A is overreach, I suppose, but I imagine that the next logical escalation in this rhetorical slapfight is going to be the government saying "we cannot guarantee that any particular use will not include some version of X, and therefore we have to prevent working with this supplier"...which I sort of see?
Just to take the metaphor to absurdity, imagine that a maker of canned tomatoes decided to declare that their product cannot be used to "support a war on terror". Regardless of your feelings on wars on terror and/or canned tomatoes, the government would be entirely rational to avoid using that supplier.