Each of the contracts to xAI, Anthropic, Google and OpenAI have a ceiling value of $200 million, the Pentagon's Chief Digital and Artificial Intelligence Office (CDAO) said in a statement.
The awards will enable the Department of Defense "to leverage the technology and talent of US frontier AI companies to develop agentic AI workflows across a variety of mission areas," it said.
The contract with xAI comes just days after the company was forced to apologize again for controversial posts by its Grok chatbot.
After an update on July 7, the chatbot praised Adolf Hitler in some responses on the X social media platform, denounced "anti-white hate," and described Jewish representation in Hollywood as "disproportionate."
xAI apologized for the extremist and offensive messages, and said it had corrected the instructions that led to the incidents.
The release on Wednesday of Grok 4, the latest chatbot version, was almost met with scrutiny after it appeared to consult Musk's positions on some questions it was asked before responding.
The contract between xAI and the Department of Defense comes even as Musk and President Donald Trump have publicly feuded in recent weeks.
Musk, a top backer of Trump's most recent presidential campaign, was entrusted with managing the new agency known as DOGE to massively slash government spending under the current administration.
After ending his assignment in May, the South African-born entrepreneur publicly criticized Trump's major budget bill for increasing government debt.
The president and the businessman engaged in heated exchanges on social media and in public statements before Musk apologized for some of his more combative messages.
- 'Critical national security needs' -
The government and the defense sector are considered a potential growth driver for AI giants.
Musk's xAI announced on Monday the launch of a "Grok for Government" service, following a similar initiative by OpenAI.
In addition to the Pentagon contract, "every federal government department, agency, or office (can now) purchase xAI products" thanks to its inclusion on an official supplier list, xAI said.
Meta meanwhile has partnered with the start-up Anduril to develop virtual reality headsets for soldiers and law enforcement.
OpenAI had previously announced in June that it had secured a Defense Department contract with a ceiling of $200 million.
"Establishing 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 with the most advanced AI capabilities U.S. industry has to offer," said the CDAO statement on Monday.
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