Pentagon awards up to $200M to Anthropic, OpenAI, xAI, and Google for AI defense projects

The Pentagon just handed out a major round of AI contracts—up to $200 million in total—to some of the most influential names in tech: OpenAI, Anthropic, Google, and Elon Musk’s xAI.

The Department of Defense (DoD) announced the awards on Monday as part of its push to speed up AI adoption inside the military. The companies will help develop AI agents for different mission areas under the guidance of the agency’s Chief Digital and Artificial Intelligence Office.

“Today, the Chief Digital and Artificial Intelligence Office (CDAO) announced contract awards to leading U.S. frontier AI companies to accelerate Department of Defense (DoD) adoption of advanced AI capabilities to address critical national security challenges,” DoD said in a news release.

DoD Taps OpenAI, xAI, Anthropic, and Google to Build AI for National Security

In its announcement, the Department of Defense said the contracts—each with a $200 million cap—will allow it to tap into the tech and talent of top U.S. AI firms, including Anthropic, Google, OpenAI, and xAI. The goal is to build agentic AI workflows across a range of mission areas. “Establishing these partnerships will broaden DoD use of and experience in frontier AI capabilities and increase the ability of these companies to understand and address critical national security needs with the most advanced AI capabilities U.S. industry has to offer,” the agency said.

Doug Matty, the Pentagon’s chief digital and AI officer, said in a statement that AI is changing how the department supports U.S. troops and keeps its edge against foreign adversaries.

“The adoption of AI is transforming the Department’s ability to support our warfighters and maintain strategic advantage over our adversaries,” Matty said. “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.” 

The news landed the same day Musk’s xAI launched “Grok for Government,” a new product suite built to serve U.S. government customers. The offering makes xAI’s models available via the General Services Administration (GSA) schedule, making it easier for federal agencies to buy and use the tools. The announcement was posted on X, Musk’s social platform.

This isn’t OpenAI’s first round of defense work. The company was previously awarded a separate $200 million, one-year contract from the DoD in 2024. Not long after, it teamed up with defense startup Anduril to bring its AI tech into national security use cases.

OpenAI has been laying more groundwork for public sector work. In June, the company launched “OpenAI for Government,” aimed at workers across federal, state, and local government agencies.

With tech giants and defense officials aligning more closely around AI, the stakes—and spending—are growing fast.

Over the weekend, The Wall Street Journal reported that SpaceX is investing $2 billion in xAI, escalating the growing AI rivalry with OpenAI.