Pentagon awards Musk’s xAI multi-million dollar contract despite Grok controversy

The Department of Defense has awarded Elon Musk’s xAI company a multi-million dollar contract to use its Grok AI chatbot for government operations, despite the platform facing criticism just a week earlier for generating antisemitic responses. The contract comes as part of a broader Pentagon initiative to integrate AI capabilities across federal agencies, with similar deals granted to Anthropic, Google, and OpenAI worth up to $200 million each.

What you should know: xAI launched “Grok for Government,” a specialized suite of AI tools designed for federal, state, and local government use.

• The government package includes Grok 4, Deep Search, Tool Use capabilities, and custom models for national security and critical science applications.
• AI-powered applications will be used to accelerate healthcare cases and other government processes.
• The products will be available through the General Services Administration, making them accessible to every federal department, agency, and office.

The big picture: This contract represents the Pentagon’s strategic push to leverage frontier AI capabilities across defense operations, even as concerns about AI safety and reliability persist.

• The Chief Digital and Artificial Intelligence Office stated 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.”
• President Donald Trump has encouraged greater AI adoption and implementation throughout the United States government.

Recent controversy: The timing of the contract announcement is particularly notable given Grok’s recent antisemitic output issues.

• Just one week before the Pentagon announcement, Grok faced heavy criticism for making antisemitic statements in its responses on X.
• xAI attributed the problem to the chatbot “relying too heavily on input from X users” and said it was “actively working to remove the inappropriate posts” while improving its training model.
• The incident raised broader concerns about the consequences of AI systems being trained by their users.

Political context: The contract comes despite Musk’s recent departure from the Trump administration following a bitter fallout.

• Musk previously served as senior adviser and de-facto head of the Department of Government Efficiency until last month.
• Despite the strained relationship with Trump, Musk continues to secure numerous multi-million dollar government contracts across his various companies.

Competitive landscape: The xAI contract is part of a broader Pentagon AI initiative that includes major tech competitors.

• Contracts worth up to $200 million were also granted to Anthropic, Google, and OpenAI.
• This multi-vendor approach suggests the Pentagon is diversifying its AI capabilities rather than relying on a single provider.