Pentagon Awards Major AI Contracts to Google, xAI, OpenAI, and Anthropic

The U.S. Department of Defense has awarded contracts worth up to $200 million each to four of the world’s leading artificial intelligence firms – Google, OpenAI, Anthropic, and Elon Musk’s xAI – as part of a broader effort to integrate advanced AI tools into national defense operations.

Announced Monday by the Pentagon’s Chief Digital and Artificial Intelligence Office (CDAO), the contracts are aimed at developing “agentic AI workflows” to support critical national security functions. According to the department, these systems are expected to help modernize military capabilities and maintain a strategic edge over global adversaries.

“The adoption of AI is transforming the Department of Defense’s ability to support our warfighters and sustain strategic superiority,” said Doug Matty, Chief Digital and AI Officer.

The move comes as the U.S. government accelerates its push toward AI integration across departments. A White House directive issued in April encouraged broader adoption of the technology, while recent policy reversals under President Donald Trump have rolled back regulations initially put in place to curb AI-related risks.

Elon Musk’s xAI, which has been gaining ground in government circles, also unveiled a new suite of tools on Monday. Branded “Grok for Government,” the suite includes its latest Grok 4 model, now available to federal, state, local, and national security agencies. The launch is seen as a direct play to expand xAI’s role in public sector AI deployments.

OpenAI’s contract, previously disclosed in June, will fund the development of prototype frontier AI capabilities for both military and enterprise applications within the Pentagon.

These new contracts deepen the relationship between top AI innovators and federal defense operations, raising both excitement and scrutiny. In May, Senator Elizabeth Warren had pressed the Defense Department to maintain competitive and transparent AI procurement practices, expressing concern over the growing presence of Musk’s Grok in federal use.

As the race to harness AI intensifies globally, the U.S. Department of Defense appears intent on ensuring that American technological leadership remains firmly embedded in its national security strategy.