Pentagon awards multiple companies $200M contracts for AI tools

The Defense Department’s Chief Digital and Artificial Intelligence Office on Monday awarded four tech companies individual contracts valued at up to $200 million to provide advanced AI capabilities to address national security challenges.

The awards were issued to Anthropic, Google, OpenAI and xAI.

“The adoption of AI is transforming the Department’s ability to support our warfighters and maintain strategic advantage over our adversaries,” Chief Digital and AI Officer Dr. Doug Matty said in a statement. “Leveraging commercially available solutions into an integrated capabilities approach will accelerate the use of advanced AI as part of our Joint mission essential tasks in our warfighting domain as well as intelligence, business, and enterprise information systems.” 

Under the contract, the Defense Department can deploy the latest AI offerings, agentic AI workflows, large language models and technologies developed by these firms.

“These advanced AI solutions will enable the DoD to effectively address defense challenges and scale the adoption of agentic AI across enterprise systems to drive innovation and efficiency with agile, proven technology,” Jim Kelly, VP of Federal Sales for Google Public Sector, said in a blog post immediately following the Pentagon’s award notices.

Broadly, the Pentagon’s AI awards exemplify how important the technology is to the Pentagon. In June, the Defense Department awarded a similar contract to OpenAI for Government to develop AI prototypes, months after Microsoft’s OpenAI-enabled Azure offerings were approved for use at the highest security classification level. Meanwhile, other AI firms like Anthropic have forged partnerships with cloud service providers and built out public sector teams to serve national security missions.

A key driver behind this momentum could be the larger pool of money the Pentagon is aiming to get for AI. The Defense Department’s latest budget request seeks billions of dollars for AI and autonomous systems for everything from autonomous “wingman” fighter drones to AI research and development, robotics development and other emerging technologies. 

New government partnerships for xAI

xAI, Elon Musk’s company focused on AI and accelerating human discovery, announced the Defense Department contract Monday and promptly made headlines with another announcement: its ‘Grok for Government’ offering. In a post on X, the company billed Grok for Government as “a suite of products that make our frontier models available to United States” government customers.

In addition, xAI said its products will be available for government purchase through the General Services Administration schedule, which allows every federal agency to make purchases against it. In short, xAI now has tools available for purchase by “every federal government department, agency, or office.”

“GSA is proud to support the DoD to harness the full potential of innovation in service to the federal government,” said GSA Federal Acquisition Service Commissioner Josh Gruenbaum. “Together, we are advancing our shared mission to deliver cutting-edge technology solutions that empower agencies, strengthen national security, and meet the evolving needs of the American people. By combining expertise and vision, we are creating a new federal enterprise prepared to meet the challenges of today and the opportunities of tomorrow.”

Google’s momentum continues

In April, Google Public Sector negotiated a temporary 71% discount on pricing for its Workspace software suite to all government customers through GSA’s DOGE-approved OneGov initiative, promoting several other companies to follow suit. In June, the company’s cloud platform, Google Distributed Cloud, achieved a major milestone in meeting the Defense Department’s Impact Level 6 security accreditation, meaning even the most sensitive national security customers can run workloads on Google Cloud.

OpenAI, Anthropic beef up government business

In recent months, tech firms OpenAI and Anthropic — which have both developed the incredibly popular large language models, ChatGPT and Claude, respectively — have launched business divisions targeting the increasingly lucrative government market.

While both companies are nontraditional government contractors, they’ve each managed to win direct awards from the Pentagon while strategically partnering with other traditional providers to make their technology available to federal agencies. 

Editor's note: This article has been updated to include additional information.