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I'm not sure how they are offering unfired bullets and brass for sale since if it's made in the Lake City plant it would be made on government equipment and could not, by law, be offered for commerical sale.
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They are selling ammo and ammo components that the US military has rejected for some reason. Some of the loaded ammo is rejected for failure to meet velocity specs. Some of that loaded ammo may be rejected for other reasons like out of spec cartridge cases, etc. Yes, it is legal for them to sell it.
When the Army ran the plants, Army EOD units got millions of rounds of rejected ammo for disposal. Now it is sold.