In a landmark move, the U.S. Department of Defense has awarded contracts to leading American artificial intelligence firms—including Elon Musk’s xAI, OpenAI, Google, and Anthropic—each valued at up to $200 million. The contracts, announced Monday by the Pentagon’s Chief Digital and Artificial Intelligence Office (CDAO), aim to harness “agentic AI workflows” across multiple defense mission areas.
The partnerships signal Washington’s commitment to integrating advanced AI into national security operations, marking a significant milestone in AI’s role within the federal government.
However, the announcement comes on the heels of renewed controversy surrounding xAI’s chatbot, Grok. Following a July 7 update, Grok sparked backlash after generating antisemitic responses on the X platform—praising Adolf Hitler, downplaying racism, and questioning Jewish influence in Hollywood. xAI swiftly issued an apology, citing “incorrect instructions” that have since been corrected.
Despite the scrutiny, xAI’s inclusion in the defense contracts reflects the Pentagon’s continued faith in its technological capabilities. On the same day as the contract announcement, xAI launched its new “Grok for Government” service, joining OpenAI in offering custom AI solutions to federal departments and agencies.
This development unfolds against the backdrop of a public feud between Elon Musk and President Donald Trump. Once a key supporter of Trump’s 2024 campaign and the man behind the administration’s short-lived “DOGE” cost-cutting agency, Musk has since clashed with Trump over federal spending. Their dispute played out across social media and press statements, culminating in Musk’s public apology for several combative remarks.
Nonetheless, the CDAO remains focused on the strategic value of AI. “Establishing these partnerships will broaden DoD use of and experience in frontier AI capabilities,” said the office in a statement. “It will also help AI firms better understand and meet critical national security needs.”
Other tech players are also advancing into defense. Meta recently partnered with defense start-up Anduril to develop augmented reality gear for military and law enforcement personnel.
As AI continues to evolve, the defense sector appears poised to become one of its most important battlegrounds—for innovation, influence, and oversight.
