Yes and maybe no. Remember that the needs of the Army is what drives the number of scholarships. The same COVID issues that may be driving application numbers down may also have an impact on the number of scholarships funded/needed. Pure speculation on my part, so take it as that. I will also comment that I would not expect the overall standards to decrease. For discussion purposes - here are the numbers from a few years ago:
For the academic year 2018-2019, more than 7,000 high school senior applications for the scholarship were reviewed.
About 3,000 applicants were awarded a scholarship. About 25% of those were 4-year scholarships and 75% were 3-year scholarships.
So 7,000 people applied and 3000 received scholarship. If they are down 20%, they still are getting 5000+ applications for 3000 slots. Yes - that does increase the odds, but does not necessarily mean that the standards are lowered. So those same group make the cut regardless of if there is 5000 or 10000 applications.