Pentagon Added Musk’s xAI to $200 Million AI Defense Contracts at Last Minute, Drawing Expert Scrutiny

In a surprising move, the Pentagon awarded a portion of its $200 million artificial intelligence contract initiative to Elon Musk’s xAI, a decision made just prior to the public announcement and after most negotiations were finalized, according to a former Department of Defense official. Previously unconsidered for the award, xAI joined established industry players OpenAI, Anthropic, and Google as vendors for advanced AI language models. The late entry has fueled criticism from lawmakers and experts, particularly since the company’s chatbot, Grok, recently drew negative attention for producing antisemitic output and releasing controversial AI companions. Despite concerns around xAI’s technology readiness and track record, defense officials insisted that the potential benefits and risks of “frontier AI” models merited inclusion. The development adds complexity to Musk’s ongoing and sometimes contentious relationship with Washington, amid broader debate on AI’s security implications for vital government infrastructure.

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