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OpenAI has secured a $200 million contract with the US Department of Defense. The new initiative, called OpenAI for Government, aims to bring artificial intelligence into more areas of government operations.
The contract is a pilot program awarded through the DoD’s Chief Digital and Artificial Intelligence Office. The focus will be on non-combat tasks. These include healthcare, cybersecurity, and data analysis. OpenAI stated that all use cases will adhere to its policies and guidelines.
This new division brings together OpenAI’s earlier public-sector projects under one umbrella. The company wants to make AI more accessible to government agencies. According to a statement, OpenAI hopes to make public service more efficient and supportive for employees.
OpenAI is already working with several government departments. These include NASA, the National Institutes of Health, the Department of the Treasury, and the Air Force Research Laboratory. Its AI models are also being used at key national laboratories. These include Los Alamos, Sandia, and Lawrence Livermore labs.
This move follows a quiet but controversial policy change in January 2024. OpenAI removed a ban that previously stopped its models from being used for military purposes. This change led to scrutiny, although OpenAI insists the Pentagon project is limited to non-combat use. Critics argue that the line between combat and non-combat tasks can blur. They warn that this may set a risky precedent for future AI deployments.
Elon Musk’s AI startup, xAI, did not get selected for this federal deal. This follows Musk’s recent public fallout with President Donald Trump. Sources say that this clash may have damaged xAI’s chances with federal agencies.
However, xAI hasn’t been completely shut out. A report from Reuters claims the Department of Homeland Security tested a custom version of Grok, xAI’s chatbot. The test was allegedly done without proper clearances. It may have violated conflict-of-interest laws and exposed sensitive data. The Department of Homeland Security has denied the allegations.
The Pentagon deal also links OpenAI to the $500 billion Stargate initiative. This is a public-private project launched earlier in 2025. Partners include Oracle, SoftBank, and the Trump Administration. The initiative aims to fast-track AI development within the US.
OpenAI's role in Stargate now places it at the center of government-aligned AI efforts. Musk’s xAI, once seen as a key player, now appears to be on the outside looking in.
Also Read: Meta Offered $100M Signing Bonuses to OpenAI Engineers But No One Left, Claims Sam Altman
