Elon Musk spent months slashing federal contracts — Now his AI firm is celebrating a $200M Pentagon contract and new unit to get authorities enterprise

The two-year outdated AI firm—most not too long ago within the information when its chatbot praised Hitler—stated in a weblog submit Monday that it has launched a brand new division, known as “Grok with Authorities” and signed a contract value as much as $200 million with the Division of Protection. xAI additionally introduced that it had been added to the Common Companies Administration schedule, that means that xAI merchandise will now be out there for buy throughout each authorities workplace and company.

xAI’s new DoD contract is a part of a brand new effort to develop AI agent workflows throughout a “number of mission areas,” the Chief Digital and Synthetic Intelligence Workplace stated in a press launch, with out giving many extra specifics. Google, OpenAI, and Anthropic had been additionally awarded as much as $200 million contracts as a part of the brand new effort, in line with the Chief Digital and Synthetic Intelligence Workplace. Various tech firms, together with Meta, Amazon, and Google, have both began working with or upped their work with the U.S. authorities within the final 12 months because the taboo in Silicon Valley of working with the Protection Division has fallen away.

xAI’s new ties with the Pentagon are prone to elevate eyebrows, not least as a result of only one week earlier, the corporate launched an replace to its Grok AI mannequin that brought about it to spew racist feedback, together with referring to itself as a “MechaHitler.” There’s additionally the truth that xAI’s CEO, Musk, has spent the final six months attempting to trim “wasteful spending” within the authorities by way of the Division of Authorities Effectivity (DOGE). DOGE claims to have saved $190 billion in U.S. taxpayer {dollars} by July—largely by way of slicing authorities contracts it stated had been outdated or wasteful (DOGE reportedly hasn’t offered documentation or proof for 40% of these cuts, and investigations and evaluation into the cuts have instructed that these figures have been drastically exaggerated.) Now, xAI is vying to get the U.S. authorities so as to add many extra contracts that would price lots of of hundreds of thousands of {dollars}.

One other twist is that the Grok announcement comes at a time when current authorities contracts at Musk’s numerous firms seem like on skinny ice. In June, amid the very-public social media spat between Musk and Trump that started with Musk’s criticisms of Trump’s “Massive Stunning Invoice,” Trump threatened to chop all of Musk’s authorities contracts throughout his numerous firms. Musk, in flip, had instructed he would decommission SpaceX’s Dragon capsule, at the moment the first means for NASA to shuttle astronauts to the Worldwide House Station and again to Earth. Musk’s firms have notched greater than $38 billion in contracts with the U.S. authorities over time.

xAI says that it needs to start out servicing federal, native, state, and nationwide safety prospects, and that, for these prospects, it might begin to construct customized fashions for nationwide safety or “important science” functions that might be out there in “labeled and different restricted environments” and that it might present particular engineering assist with USG-cleared engineers.

Whereas Musk is now not working with DOGE, he stays well-connected in some authorities circles. One in every of his allies inside the Trump Administration was Katie Miller, who had served as Mike Pence’s press secretary when he was vp throughout Trump’s first presidency. Miller can also be the spouse of Stephen Miller, Trump’s deputy chief of workers for coverage, and she or he has since began working for xAI since Musk left DOGE. On Monday, Miller was selling xAI’s new authorities plans on her social media account, saying that Grok was the “solely truth-seeking AI out there to the US Authorities.”

xAI and the Division of Protection didn’t reply to requests for remark. GSA stated it was working with “a number of” AI options throughout numerous businesses and that it welcomes “all American firms and fashions who abide by our phrases and circumstances.”