Not even a “MechaHitler” meltdown was enough to scare off the Pentagon, apparently.
Just days after xAI’s Grok chatbot generated a stream of antisemitic and homophobic responses, Elon Musk’s company announced that it secured a $200 million defense contract to develop and supply AI tools to federal workers.
The Department of Defense’s Chief Digital and Artificial Intelligence Office announced the contract on Monday, saying it is designed to help the government tap into the latest AI tools for everything from battlefield operations to business needs.
“The adoption of AI is transforming the Department’s ability to support our warfighters and maintain strategic advantage over our adversaries,” CDAO Chief Digital and AI Officer Dr. 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.”
According to Lucas Hansen, the co-founder of the AI security and education nonprofit CivAI, the deal with xAI is less about immediate use and more about keeping pace with global rivals.
“The government wants to support the frontier labs and development of AI so that the U.S. doesn’t fall behind China,” Hansen told Decrypt. “Then there’s the question of how those funds are distributed and how that support is provided. I think this might just be the specific way they’ve chosen to support the companies, rather than an expectation of internal deployment immediately.”
But Hansen warned that Grok’s underlying behavior raises deeper concerns about how it might act in high-stakes government settings.
“Even if Grok is deployed by the government using the same version that previously showed a willingness to generate harmful responses, then—even if those use cases aren’t explicitly antisemitic or hateful—it’s fundamentally more likely to behave unethically and autonomously,” he said.
Grok has been the center of several public meltdowns. In May, reports surfaced that Grok inserted “white genocide” claims into unrelated prompts. xAI blamed the issue on a rogue employee. Last week, just before the Grok 4 launch, the chatbot again drew criticism for a wave of racist and homophobic outputs, leading to the resignation of X CEO Linda Yaccarino.
While concerns linger over how Grok might behave in sensitive environments, Hansen said the version the Pentagon uses is not likely to be the same as the one that X users have had access to since November 2023.
The $200 million award is the latest deal between the United States military and top AI developers. Other AI developers receiving $200 million contracts include Google, Anthropic, and OpenAI. In November, Meta said it would make its open-source Llama AI model available to U.S. defense agencies and contractors. In June, ChatGPT developer OpenAI was awarded its own $200 million contract with the Department of Defense, launching its AI suite, OpenAI for Government.
If the Pentagon deployed Grok over a rival, Hansen emphasized it would be because Grok is “open-weight,” meaning it can be run on private hardware and not require an API connection back to xAI.
Announcing Grok for Government – a suite of products that make our frontier models available to United States Government customers
We are especially excited about two new partnerships for our US Government partners
1) a new contract from the US Department of Defense
2) our…— xAI (@xai) July 14, 2025
Despite Grok’s recent controversies, at the heart of the deal, Hansen said, may be a simple strategic calculation: Stay close to the key players shaping the future of AI.
“I think most of this is the government wanting to have a relationship with all the frontier labs, and they hit the four labs that actually matter,” he said.
In a separate statement announcing the deal with the Pentagon, xAI said its mission is to create AI tools to “assist humanity in our quest for understanding and knowledge.” To do this, xAI announced the launch of Grok for Government, a suite of AI tools including the recently launched Grok 4 and Deep Search.
“America is the world leader in AI, and this is in no small part due to a tradition of innovation and strong investments in engineering and science,” xAI wrote. “We’re excited to contribute back to the country that made xAI uniquely possible here.”
xAI did not respond to requests for comments from Decrypt.
