Fedrooms does not restrict participation in loyalty programs:

https://www.fedrooms.com/loyalty.html

I'm sure I've stayed in dozens of places listed on fedrooms (although I've booked directly through Marriott -- at below per diem in some cases because I'm conscious of the taxpayer and receive upgrades. There is nothing in the fedrooms terms and conditions that restricts the hotel from upgrading a federal traveler.

Perhaps you're confusing ethics rules that might apply to senior officials in groups or travel organizers. A senior official in a group or a travel organizer could not accept an upgrade that was associated with their role. On the other hand, if the General or Colonel is a Marriott Plat and the upgrade because of that, it would be permissible.

If in doubt, contact your agency ethics official.