The U.S. Department of Defense (DoD) has awarded contracts worth up to $200 million each to leading AI firms OpenAI, Google, Anthropic, and xAI, in a major push to expand the use of artificial intelligence across national security operations. According to the DoD’s Chief Digital and Artificial Intelligence Office (CDAO), the initiative aims to develop agentic AI systems that can support mission-critical workflows.
“The adoption of AI is transforming the (DoD’s) ability to support our warfighters and maintain strategic advantage over our adversaries,” said Doug Matty, Chief Digital and AI Officer at the DoD.
These contracts come in the wake of increased government interest in leveraging AI, following an April directive from the White House encouraging federal agencies to incorporate advanced technologies. In a shift from earlier policy, President Donald Trump has rolled back a 2023 executive order that required companies to disclose AI training data—part of his broader efforts to ease AI regulation and accelerate adoption.
xAI, the AI startup founded by Elon Musk, separately announced a new suite of offerings under the banner “Grok for Government,” making its AI models—including the latest Grok 4—available for deployment across local, state, and federal agencies.
Before this announcement, the Pentagon had already awarded a similar $200 million contract to OpenAI for the development of “prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains.”
The contracts also come at a politically complex moment. Tensions have reportedly grown between Elon Musk and President Trump. Once a key supporter during the 2024 election campaign, Musk has since distanced himself and even launched a new political outfit, the “American Party,” over concerns about federal spending.
Adding to xAI’s challenges, the company recently faced backlash after its Grok chatbot was found making antisemitic remarks and praising Adolf Hitler. xAI issued an apology, attributing the incident to outdated code and the influence of extremist users.
“Since then, xAI has apologized for Grok’s ‘horrific’ conduct and blamed it on a ‘deprecated’ code along with the extremist views of its users.”
Despite the controversy, the DoD’s investment signals growing reliance on AI to maintain technological and strategic superiority.
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