Elon Musk’s Xai has signed a key new customer: the US government.
A 2-Year-Old AI Company – In the news that Chatbot praised Hitler, recently launched a new division called “Grok With Government” in a blog post Monday, signing a contract worth up to $200 million with the Department of Defense. Xai also announced that it has been added to its General Services Management schedule. This means that Xai products are now available for purchase at all government agencies and agencies.
Xai’s new DOD agreement is part of a new initiative to develop AI agent workflows across “various mission areas,” the Chief Digital and Artificial Intelligence Office said in a press release without providing further details. According to the Chief Digital and Artificial Intelligence Office, Google, Openai and humanity have been awarded contracts of up to $200 million as part of a new initiative. Many tech companies, including Meta, Amazon and Google, began working with and worked with the US government last year after the Silicon Valley taboos collaborated with the Department of Defense fell.
Xai’s new connection to the Pentagon could raise eyebrows, especially as the company released an update to its Grok AI model, which spewed racist comments, such as the one week ago, calling it “Mechahitler.” It is also the fact that Xai CEO Musk has spent the past six months trying to settle the government’s “wasteful spending” through the Ministry of Efficiency (DOGE). Doge claims it saved $190 billion in US taxpayer dollars by July. This was said to be outdated or wasted by cutting government contracts (Doge reportedly doesn’t provide 40% of the document or evidence of these cuts.
Another twist is that GROK’s announcement comes when existing government contracts at various companies in Musk appear to be on thin ice. In June, amid the spew of very public social media between Musk and Trump, Trump began with criticism of Trump’s “big beautiful bill,” Trump threatened to cut all of his government contracts for Musk at various businesses. Musk was now suggesting that NASA would close astronauts to the International Space Station and abolish SpaceX’s Dragon Capsule, the main way to return to Earth. The mask company has over $38 billion in contracts with the US government over the years.
Xai wants to start services to federal, local, state and national security customers, and for these customers, it says it will begin building custom models of national security or “critical science” applications that can be used in “classified and other restricted environments” and will provide specific engineering support to USG CEREED engineers.
Musk no longer works with Doge, but he is well connected in several government circles. One of his allies within the Trump administration was Katie Miller, who served as spokesman for Mike Pence when he was vice president during Trump’s first presidency. Miller was also the wife of Stephen Miller, Trump’s deputy policy chief of staff, and later began working at Zai after Musk left Doj. On Monday, Miller was promoting Xai’s new government plan on social media accounts.
A representative from the Department of Defense said he was “excited with industry leaders such as Xai and other industry leaders who have awarded contracts “to expand DOD use and experience in Frontier AI capabilities.” GSA said it is working with “several” AI solutions at various agencies and welcomes “all American companies and models that comply with our terms and conditions.”
Xai did not respond to requests for comment.
Updated, July 15, 2025: This article has been updated with comments from the Department of Defense.
