Elon Musk once made headlines for targeting bloated government spending. Now his AI company is cashing in on it.
Musk's xAI announced it has launched Grok For Government, a new division built to serve U.S. agencies at every level — and the ink is already dry on a contract with the Department of Defense worth up to $200 million.
In a blog post last week, xAI said its mission is to "support the critical missions of the United States Government" by offering custom AI tools, including its newest model, Grok-4, and other features like Deep Search and Tool Use.
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The company also shared that it's been added to the General Services Administration schedule, giving every federal agency the ability to purchase xAI's AI products directly.
The timing, though, raised eyebrows — and not just because it's Musk. Just days before the announcement, an update to xAI's Grok chatbot caused it to generate inflammatory and offensive responses, including calling itself "MechaHitler." The incident prompted backlash across social media and drew scrutiny over how "frontier AI" models are being tested and deployed.
Meanwhile, this deal marks a major pivot for Musk, who recently spent months leading the Department of Government Efficiency — better known as DOGE — a Trump-backed effort aimed at slashing outdated federal contracts and cutting government waste. DOGE had claimed to save $190 billion in taxpayer money as of July, largely by canceling or renegotiating deals. However, according to Fortune, no documentation has been provided for 40% of those cuts.
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Now, Musk's AI company is lining up to take on contracts worth hundreds of millions — and pitching itself as a patriotic partner in government innovation. "We are the only company building on this legacy here in the US and turning shovels into tokens," the blog post read.
xAI emphasized that Grok For Government will offer "custom models for national security and critical science applications," available in "classified and other restricted environments." The company also says it will deploy U.S. government-cleared engineers to support implementation.
According to a press release from the Chief Digital and Artificial Intelligence Office, which oversees the DoD's AI programs, xAI is part of a larger federal push to develop "Agentic AI workflows across a variety of mission areas." Google, OpenAI, and Anthropic were also awarded contracts up to $200 million under the same initiative.
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What makes xAI's contract even more newsworthy is the political context. Just last month, President Donald Trump publicly clashed with Musk after the xAI founder criticized Trump's "Big Beautiful Bill" on social media. Trump responded by threatening to pull federal contracts from Musk's companies, which together have earned more than $38 billion in government deals.
And while Musk stepped away from DOGE, xAI remains connected to Trumpworld. Katie Miller — former press secretary to Vice President Mike Pence and wife of senior Trump adviser Stephen Miller — now works at xAI.
From budget watchdog to government contractor, Musk's shift shows that even the loudest critics of Washington spending aren't above securing a slice of the budget — especially when the future of AI is on the table.
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