US Defense Department accelerates AI adoption with contracts to several genAI vendors

The US Department of Defense’s Chief Digital and Artificial Intelligence Office (CDAO) on Monday announced it had awarded contracts worth up to $200 million each to four leading generative AI (genAI) companies to develop AI capabilities needed for “critical national security issues.”

The contracts with Anthropic, Google, OpenAI, and xAI will, CDAO said, “enable the Department to leverage the technology and talent of US frontier AI companies to develop agentic AI workflows across a variety of mission areas.” 

The department defines frontier AI companies as those that “lead development of the most advanced AI models and technologies, conduct insightful research into the use of frontier AI, and pioneer efforts to address both the potential benefits and risks of frontier AI technologies.”

CDAO is also providing access to all four companies’ genAI models for general purpose use in multiple defense departments, including the Office of the Secretary of Defense, and will provide wider access via embedded AI models within Department of Defense (DoD) enterprise data and AI platforms. It is also partnering with General Services Administration (GSA) to bring AI technologies to the US government as a whole, while aiming to control the costs of AI production and required computing resources through combined buying power.

“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 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.”

“What’s interesting about this move is the fast-tracking aspect and approach as to how the DoD is going about this.” said Erik Avakian, technical counselor at Info-Tech Research Group and former CISO for the Commonwealth of Pennsylvania. ”Instead of relying solely on the slower, traditional procurement acquisition process, something that has widely been regarded as a barrier for technological change across state, local, and federal government, they’re tapping directly into the commercial market’s agility. The incredible pace of change with AI, and these companies themselves, are moving extremely fast.  And with the announcement, it’s clear that the Pentagon wants to match that fast pace to stay ahead of things strategically.”

However, he observed, there are risks to the approach. The usual slow government acquisition process provides time to check out technology and vendors, and, he noted, some of the chosen models have stumbled badly in the past. There need to be strong governance processes and ethical guardrails in place to mitigate risk.

Still, he said, “from a capability standpoint, this is a bold move. Rather than trying to build everything in-house or rely solely on legacy vendors, they’re pulling in the best from the private sector to test and scale what actually works. If done right, this could help modernize parts of the government that are often decades behind. So overall, I think it’s a bold move in the right direction. … the success of this initiative (and others) is going to come down to how well the balance between innovation and governance oversight is managed and executed.”

In a separate announcement, xAI today unveiled Grok for Government, a suite of products for US federal, state, local, and national security customers. In addition to what’s in the company’s commercial offerings, it includes custom models, additional support, custom AI-powered applications, and soon, models in classified and other restricted environments.

This story has been updated with analyst comments.