Elon Musk’s xAI Joins Pentagon AI Contracts Late in the Process
The Pentagon recently awarded multimillion-dollar contracts to four AI companies to tackle critical national security challenges. Alongside well-known names like Anthropic, Google, and OpenAI, Elon Musk’s startup xAI was included—raising eyebrows among AI experts and government insiders.
A former Pentagon official involved early in the initiative revealed that xAI’s inclusion was a late decision made during the Trump administration. Up until March 2025, there had been no talks or planning involving xAI’s Grok model.
Late Addition Raises Questions
Glenn Parham, who served as a generative AI technical lead at the Pentagon’s Chief Digital and Artificial Intelligence Office, stated, “There had not been a single discussion with anyone from X or xAI, up until the time I left.” Parham helped negotiate AI deals and integrate AI into defense projects before taking a government buyout in March.
Contracts with each company have a funding range from $2 million up to $200 million, depending on progress and success. Notably, just before the contract announcement, xAI’s Grok chatbot made headlines for an antisemitic episode and controversial AI “companions” that raised ethical concerns.
Concerns Over xAI’s Readiness and Reputation
xAI’s track record and reputation don’t match the typical standards for government contracts. Despite Musk’s long history with government contracts through SpaceX, critics question whether Grok’s AI is reliable enough for sensitive military applications.
Senate Minority Leader Chuck Schumer publicly criticized the contract, calling it “wrong” and “dangerous,” and pressed the Trump administration for explanations about the deal and its implications for national security.
Why Include xAI?
The Pentagon's AI initiative initially focused on established companies like OpenAI and Anthropic, which have proven compliance with government security protocols and long-term cloud partnerships. The rationale behind adding xAI remains unclear, as Pentagon officials have declined to clarify the decision.
The Defense Department defended the choice, stating that questionable outputs are common among frontier AI models and that the department will manage risks during prototyping. They emphasized that AI models at the forefront inherently carry both potential and risk.
Challenges Ahead for xAI
Parham noted that xAI is behind other contractors in navigating the government’s authorization process for AI deployment. While Anthropic and OpenAI have passed extensive reviews, xAI had not completed these as of March 2025.
He expects it will take xAI much longer to have its technology fully operational within government environments, though it’s not impossible. The Defense Department confirmed that authorization levels will vary depending on specific use cases and that each company will engage with stakeholders during prototyping.
Military Use of Large Language Models
The contracts deepen the military’s engagement with AI technologies, particularly large language models (LLMs). The military plans to use these models for tasks ranging from email summarization to complex intelligence analysis and language translation.
Other Defense Department projects, like Project Maven, already integrate AI and machine learning with battlefield data. The use of commercial AI models raises security and privacy concerns, especially given the vast data these models train on.
Industry and Expert Reactions
Within AI circles, Grok’s capabilities are debated. While it scores well on some AI benchmarks, its recent antisemitic output and controversial content have damaged its reputation. Experts warn the chatbot shows signs of unsafe behavior and unpredictable responses.
Josh Wallin, an AI and military research expert, highlighted risks of AI “hallucinations” — false or misleading outputs that could compromise intelligence reporting. Such risks demand thorough scrutiny before military deployment.
xAI’s Place in a Complex Political and Defense Landscape
Musk’s relationship with the government is complex. Beyond SpaceX contracts, his political disputes with former President Trump have led to threats against his government deals. Musk has also expressed plans to launch a political party focused on fiscal issues.
Despite challenges, some experts see value in engaging a wide range of AI firms, including xAI, to broaden innovation and capabilities within defense projects.
Conclusion
The Pentagon’s AI contracts signal a significant push to integrate AI into national security operations. However, xAI’s late entry, recent controversies, and unproven government compliance highlight the challenges in balancing innovation with security and reliability.
Government professionals involved with AI procurement and integration should closely monitor how these partnerships evolve, especially regarding risk management and operational readiness.
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