OpenAI Secures $200 Million Contract with U.S. Department of Defense for AI Development

OpenAI's $200M DoD contract could squeeze frenemy Microsoft | TechCrunch

OpenAI said Monday the U.S. Department of Defense granted it a contract for up to $200 million to help the agency identify and build prototype systems that use its frontier models for administrative tasks and more. OpenAI provides a few examples of possible tasking, such as helping service members get healthcare, streamlining data on various programs, and "supporting proactive cyber defense." The company also said that "All use cases must be consistent with OpenAI's usage policies and guidelines." The DoD's announcement used slightly more straightforward wording. It says, "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains." Whether that reference to war-fighting applies to the weapons themselves or just other areas associated with wars, like paperwork, remains to be seen. OpenAI's guidelines do forbid individual users to use ChatGPT or its APIs to develop or use weapons. However, OpenAI deleted the explicit prohibitions of "military and warfare" in its terms of service back in January, 2024. Given how heavily some powerful people in Silicon Valley have warned of the dangers of China's advanced LLM models, it's not surprising the DoD wants to use OpenAI for whatever purposes it wants. For instance, Marc Andreessen, co-founder of VC firm Andreessen Horowitz, an OpenAI investor, recently appeared on Jack Altman's "Uncapped" podcast (brother of Sam Altman). Andreessen described the race between China's AI and the western world's models as a "cold war." Still, perhaps an equally interesting part of this announcement is what it says about OpenAI's increasingly strained relationship with its major investor Microsoft. Microsoft has thousands of contracts with the federal government worth hundreds of millions of dollars. It has, for decades, been implementing the strict security protocols necessary for the government - especially the DoD - to use its cloud. OpenAI announced this deal as part of its broader new "OpenAI for Government" program, which consolidates a number of other programs it uses to sell wares directly to government agencies, including the U.S. National Labs⁠, the Air Force Research Laboratory, NASA, NIH, and the Treasury, according to the company. But it was only in April that Microsoft announced the DoD had approved its Azure OpenAI Service for all classified levels. Now the DoD is also going straight to the source. From Microsoft's perspective: ouch. Neither OpenAI nor Microsoft immediately responded to a request for comment.

OpenAI Signed a $200M Deal With the Defense Department: Why You Should Pay Attention

The US Department of Defense has awarded ChatGPT maker OpenAI a $200 million contract to develop "prototype frontier AI capabilities," the government and company announced on Monday. The deal is through the Defense Department's chief digital and artificial intelligence office and is expected to be completed in one year. OpenAI said in its release that its AI could be used to help the department do tasks from "transform[ing] its administrative operations ... to streamlining how they look at program and acquisition data, to supporting proactive cyber defense." That's a pretty broad list, from automating bureaucratic processes to potentially letting OpenAI's tech play a major role in the digital systems that safeguard every American's personal information and more. It could be just the first step in a more widespread adoption by government agencies. The contract is a pilot program and the first partnership in the new OpenAI for Government initiative, through which the company aims to put its AI tools in the hands of "public servants across the United States." Through the initiative, OpenAI says it's offering access to AI "models within secure and compliant environments" and also, on a limited basis, new custom AI models for national security for federal, state and local governments. This isn't OpenAI's first time dipping its toes into government operations. The company in January launched ChatGPT Gov, a new pathway for government employees to access OpenAI's models while still following the necessary security protocols. It also has partnerships with US National Labs⁠, the Air Force Research Laboratory, NASA, the National Institutes of Health and the Treasury Department. Those will all be folded into OpenAI for Government. This deal also builds on OpenAI's other security work. Late last year the company announced a partnership with Anduril, a defense contractor with a focus on AI and robotics/drones. Anduril's press release explicitly calls out OpenAI's potential to "improve the nation's defense systems that protect U.S. and allied military personnel from attacks by unmanned drones and other aerial devices." (Anduril also recently announced a new deal with Meta for VR/AR tech for the US Army.) Many essential questions around AI, like those involving privacy and safety, are still unanswered. That takes on ever greater significance as generative AI gets adopted in government operations that may involve things like sensitive personal information, legal status or law enforcement activity. That could put to the test OpenAI's policies, which specify that its AI shouldn't be used to compromise the privacy of real people, including to "create or expand facial recognition databases without consent" and "conduct real-time remote biometric identification in public spaces for law enforcement purposes." It's not surprising to see OpenAI cozy up to the US government. Since its original ChatGPT model spurred the generative AI rush starting in late 2022, governments here and abroad have struggled with how to implement and regulate the new tech. It's affected every branch of the US government. There hasn't been any substantial federal regulation around AI -- to the contrary, President Trump's "big beautiful bill" government spending bill making its way through Congress would prevent states from regulating AI themselves. Some government departments, like the US Copyright Office, have laid out some guidelines for AI. Meanwhile in the courts, publishers and artists have filed lawsuits against AI companies alleging copyright infringement and misuse of training material. (Disclosure: Ziff Davis, CNET's parent company, in April filed a lawsuit against OpenAI, alleging it infringed Ziff Davis copyrights in training and operating its AI systems.)

OpenAI awarded $200 million US defense contract

Jess Weatherbed is a news writer focused on creative industries, computing, and internet culture. Jess started her career at TechRadar, covering news and hardware reviews. OpenAI is officially on the Pentagon's payroll. The Department of Defence announced a $200 million contract with OpenAI to provide the US government with new artificial intelligence tools, including those used for proactive cyber defense. In a post outlining its latest contracts, the DoD said that OpenAI "will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains." The work will primarily be completed in the Washington, DC region with an estimated completion date of July 2026. OpenAI said in a new blog post that the DoD contract is its first partnership under a new initiative to provide its AI technology to workers across federal, state, and local governments. The company is offering custom models for national security on "a limited basis," according to the announcement, with OpenAI saying that all use cases must comply with its policies and guidelines. OpenAI's current usage policy bans its services from being used to "develop or use weapons" and "injure others or destroy property." "This contract, with a $200 million ceiling, will bring OpenAI's industry-leading expertise to help the Defense Department identify and prototype how frontier AI can transform its administrative operations, from improving how service members and their families get health care, to streamlining how they look at program and acquisition data, to supporting proactive cyber defense," OpenAI said. This isn't the first time OpenAI has bedded down with the military, having entered a partnership with Anduril Industries in December 2024 to integrate its AI software into the defense tech company's counterdrone systems. The new one-year DoD contract is antithetical to earlier versions of OpenAI's terms of service that banned its technology from being used for "military and warfare" -- a prohibition removed by the company last year. OpenAI's DoD contract is the latest of several efforts to bolster military efforts with AI technology, with the US having renamed the AI Safety Institute earlier this month to focus on combating national security risks instead of overall safety. Rival AI developer Anthropic announced an AI model with looser guardrails for US defense and intelligence agencies on June 5th, Google removed commitments in February to not use AI in ways "that cause or are likely to cause overall harm," and Meta started allowing the US government to use its Llama AI model for "national security applications" last year.

OpenAI scores $200m Defense Department AI pilot deal

DoD says deal covers 'warfighting'. OpenAI merely mentions healthcare and 'supporting proactive cyber defense' The US Department of Defense has contracted OpenAI to run a pilot program that will create "frontier AI," but it's not clear what they're building together. Evidence of the deal appeared on Monday in the Department's (DoD's) daily list of newly-awarded contracts. That document mentions an award of up to $200 million for OpenAI. According to the brief details, the AI upstart will receive $2 million immediately, with more to come. "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the DoD alert reads. OpenAI mentioned a deal with the DoD in a blog post that announces the launch of a larger initiative called "OpenAI for Government". As that name implies, the program aims to bring OpenAI's tech to Washington. The post also mentions the defense deal, stating it will "prototype how frontier AI can transform [the DOD's] administrative options." The post mentions outcomes such as helping service members get health care and aiding cyber defense. The word "warfighting" is conspicuously absent in OpenAI's post, which notes that use cases "must be consistent with OpenAI's usage policies and guidelines." Those policies prohibit using OpenAI technology to "develop or use weapons." The company's past policies banned "military and warfare" applications entirely, but last January it changed its wording to "Don't use our service to harm yourself or others." It's unclear if the same legalese applies to government users. We've asked OpenAI to clarify matters. For now, our best guess is: Cyber defense could certainly be useful in "warfighting," but isn't technically a weapon. The contract comes just days after OpenAI's Chief Product Officer Kevin Weil and former OpenAI Chief Revenue Officer Bob McGrew were officially sworn into the US Army Reserve as lieutenant colonels. The CTOs of Palantir and Meta did likewise and joined the newly formed Detachment 201: Executive Innovation Corps, which is advising the Pentagon on bringing AI to the military. OpenAI has previously worked on military contracts with Anduril, the defense contractor set up by Oculus founder Palmer Luckey after he was shown the door at Meta - then Facebook - reportedly for his political views. Incidentally, Meta and Anduril reunited for a different military tie-up last month. That effort will see the companies try to create some kind of augmented reality tech for soldiers after Microsoft gave up on a similar program. ®

OpenAI wins $200 million U.S. defense contract

OpenAI CEO Sam Altman speaks during the Snowflake Summit in San Francisco on June 2, 2025. OpenAI has been awarded a $200 million contract to provide the U.S. Defense Department with artificial intelligence tools. The department announced the one-year contract on Monday, months after OpenAI said it would collaborate with defense technology startup Anduril to deploy advanced AI systems for "national security missions." "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the Defense Department said. It's the first contract with OpenAI listed on the Department of Defense's website. Anduril received a $100 million defense contract in December. Weeks earlier, OpenAI rival Anthropic said it would work with Palantir and Amazon to supply its AI models to U.S. defense and intelligence agencies. Sam Altman, OpenAI's co-founder and CEO, said in a discussion with OpenAI board member and former National Security Agency leader Paul Nakasone at a Vanderbilt University event in April that "we have to and are proud to and really want to engage in national security areas." OpenAI did not immediately respond to a request for comment. The Defense Department said OpenAI's work on the contract will mainly happen in the National Capital Region, which encompasses Washington and several nearby counties in Maryland and Virginia. Meanwhile, OpenAI is working to build additional computing power in the U.S. In January, Altman appeared alongside President Donald Trump at the White House to announce the $500 billion Stargate project to build AI infrastructure in the U.S. The new contract will represent a small portion of revenue at OpenAI, which is generating over $10 billion in annualized sales. In March, the company announced a $40 billion financing round at a $300 billion valuation.

OpenAI awarded $200 million US defense contract for the use of its AI models

It's part of the company's new initiative called OpenAI for Government. OpenAI has just launched an initiative called OpenAI For Government starting with a modest new contract. The company was awarded $200 million by the US Department of Defense (DoD) to develop "prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," according to the DoD's website. The contract is the DoD's first with OpenAI. It will last a year and take place largely in an area that includes Washington, DC and nearby counties in Maryland and Virginia. The company said its new program will provide federal, state and local governments access to its latest models through ChatGPT Enterprise and ChatGPT Gov, along with custom models for national security on a limited basis. "This contract, with a $200 million ceiling, will bring OpenAI's industry-leading expertise to help the Defense Department identify and prototype how frontier AI can transform its administrative operations, from improving how service members and their families get health care, to streamlining how they look at program and acquisition data, to supporting proactive cyber defense," the company said. Last last year, OpenAI announced that it was partnering with Palmer Lucky's defense startup Anduril Industries to develop AI for the Pentagon. The companies said they aimed to combine OpenAI's models, including GPT-4o, with Anduril's systems and software to improve the US military's defenses against unpiloted aerial attacks. However, OpenAI and the DoD didn't reference Anduril or drone defense in their announcements today. The contract opens up a new source of revenue for OpenAI. The company recently said that it will increase sales from around $10 billion currently all the way to $125 billion in just four years, without providing many details on how it plans to do that. Currently, OpenAI makes money from ChatGPT for consumers, along with business products and its application programming interface (API). It spends a lot more than it makes, having lost $5 billion in 2024 on around $4 billion in revenue. In January, OpenAI announced the $500 billion Stargate program to develop additional computing power in the US. The company completed a $40 billion financing round that values it currently at over $300 billion. However, critics have argued that that despite burning enormous amounts of cash on cloud infrastructure, it still has no clear path to profitability. Relations are also reportedly tense with the company's close partner Microsoft at the moment.

OpenAI lands $200 million US defense contract

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? The Department of Defense has awarded a one-year, $200 million contract to OpenAI to develop advanced artificial intelligence tools aimed at addressing critical national security challenges "in both warfighting and enterprise domains." The deal was announced Monday in the DoD's daily list of newly awarded contracts. The Department of Defense said OpenAI will receive $2 million immediately for research and development purposes. The company will also use the funds to test and evaluate prototype AI models before deployment. Under the agreement, OpenAI will develop frontier AI capabilities to improve healthcare for service members, streamline data analysis, and support proactive cyber defense. Most of the work will be focused in the Washington, DC area, with an estimated completion date of July 2036. In a separate post, OpenAI noted that the contract is part of its new OpenAI for Government initiative, which develops AI solutions for the public sector. The company already has partnerships with multiple federal agencies, including NASA, the NIH, the Air Force, and the Treasury Department, but this is the first time it has been awarded a contract by the DoD. The new initiative will unify all existing partnerships that OpenAI has with federal, state, and local public-sector agencies in the US, enabling them to access OpenAI's latest and most capable AI models, including ChatGPT Enterprise and ChatGPT Gov. The company will also offer custom AI models to the DoD for national security purposes "on a limited basis." OpenAI noted that the contract requires the DoD and other government agencies to comply with its usage policies and safety guidelines. The company's current policies forbid its partners from using its technology to develop weapons, but it no longer prohibits them from using it for "military and warfare" - a clause it removed from its policy document last year. Despite being a major milestone in its short history, the $200 million contract is likely to contribute very little to OpenAI financially. The company's annualized revenue hit $10 billion in June 2025, up from $5.5 billion in December 2024. It has also announced a revenue target of $12.7 billion for 2025, fueled by the growing adoption of ChatGPT across various sectors. OpenAI secured the DoD contract several months after announcing a collaboration with defense technology startup Anduril to develop AI tools for "national security missions." Anduril received a $100 million defense contract in December, just weeks after OpenAI rival Anthropic announced partnerships with Palantir and Amazon to deploy its AI models for US defense and intelligence agencies.

OpenAI just signed a huge deal with the US government - and it could change the future of AI as we know it

OpenAI is consolidating its US government AI tools, such as ChatGPT Gov, under a single umbrella - OpenAI for Government. OpenAI, alongside the likes of Anthropic and Meta, has partnered multiple times with the US government to develop new AI tools specialised for government workloads. The new initiative will provide federal, state, and local governments with access to OpenAI's most secure and compliant models, models specialized for national security, insight into upcoming models and tools, and support. Kicking off the new project, OpenAI has signed a $200 million with the U.S. Department of Defense's Chief Digital and Artificial Intelligence Office (CDAO). The project will focus on improving administrative work such as service member healthcare access, to boosting cyber defenses and data acquisition. "Across these efforts, we're aiming to improve both the day-to-day experience of public service and to help government employees feel more empowered, more efficient, and more supported in their critical missions," OpenAI said. "We are already seeing how OpenAI can help public servants at the state level spend less time on repetitive tasks and more time on high-impact work," the announcement continued, with Open AI referencing the effectiveness of ChatGPT use for the Commonwealth of Pennsylvania, which saved employees around 105 minutes per day. OpenAI is also deploying AI models at Los Alamos, Lawrence Livermore, and Sandia National Labs to improve scientific research, innovation, and national security. "We are just getting started, and we look forward to helping U.S. government leaders harness AI to better serve the public. We are committed to working in close partnership with agencies, advancing their missions with powerful tools that are safe, and secure," the company added.

OpenAI wins $200m contract with US military for 'warfighting'

The US Department of Defense on Monday awarded OpenAI a $200m contract to put generative artificial intelligence (AI) to work for the US military. The San Francisco-based company will "develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains", according to the defense department's posting of awarded contracts. The program with the defense department is the first partnership under the startup's initiative to put AI to work in governments, according to OpenAI. The company plans to show how cutting-edge AI can vastly improve administrative operations such as how service members get healthcare and also cyber defenses, according to a blog post. The startup claims that all use of AI for the military will be consistent with OpenAI usage guidelines, which are determined by OpenAI itself. Big tech companies are increasingly pitching their tools to the US military, among them Meta and, more predictably, Palantir, the AI defense company founded by Peter Thiel, the conservative tech billionaire who has played a major role in Silicon Valley's rightward shift. OpenAI and defense tech startup Anduril Industries late last year announced a partnership to develop and deploy AI solutions "for security missions". The alliance brings together OpenAI models and Anduril's military tech platform to ramp up defenses against aerial drones and other "unmanned aircraft systems", according to the companies. "OpenAI builds AI to benefit as many people as possible, and supports US-led efforts to ensure the technology upholds democratic values," OpenAI's chief executive, Sam Altman, said at the time.

OpenAI just got a $200 million Defense Department contract

Monday's announcement seems to consolidate those efforts under a single banner, as OpenAI positions itself as the AI vendor of choice in Washington. The recently announced contract will be carried out by OpenAI Public Sector LLC and based largely in the Washington area. This isn't OpenAI's first move toward the defense-industrial complex. In recent months, the company has partnered with defense startup Anduril to build AI-powered anti-drone systems, brought on a former Pentagon official to lead its national security policy team, and added ex-NSA head Paul Nakasone to its board. Nakasone recently interviewed OpenAI CEO Sam Altman at Vanderbilt, where Altman said the company was "proud to... engage in national security areas."

OpenAI Lands Pentagon Deal -- Musk's xAI Left Watching From Sidelines - Decrypt

It follows OpenAI's quiet policy shift that opened the door to military applications. ChatGPT developer OpenAI launched a new division on Monday to further integrate its artificial intelligence tools into U.S. government operations -- and it's starting with a $200 million pilot contract with the U.S. Department of Defense. Musk's xAI was left behind, which is not surprising given the spectacular blowup the richest man in the world had with President Donald Trump earlier this month. The new federal initiative, dubbed OpenAI for Government, consolidates the company's existing public-sector projects under one umbrella and expands access to its most advanced models. "Across these efforts, we're aiming to improve both the day-to-day experience of public service and to help government employees feel more empowered, more efficient, and more supported in their critical missions," OpenAI said in a statement. According to OpenAI, the Department of Defense pilot, awarded through its Chief Digital and Artificial Intelligence Office, will explore how generative AI can streamline non-combat tasks, declaring "all use cases must be consistent with OpenAI's usage policies and guidelines." While OpenAI said the deal aligns with its policy of not allowing its AI tools in military applications, the company faced scrutiny in January 2024 after it quietly removed its prohibition on using ChatGPT for military purposes. Other federal agencies already collaborating with OpenAI include NASA, the National Institutes of Health, the Department of the Treasury, and the Air Force Research Laboratory. Additionally, OpenAI models are being deployed at the Los Alamos, Lawrence Livermore, and Sandia National Laboratories. In January, OpenAI, Oracle, and Japanese conglomerate Softbank joined with the Trump Administration in launching Stargate, a $500 billion private-sector initiative to AI development in the U.S. It's not like xAI has been totally shut out of the federal government. Unnamed sources told Reuters that a customized version of Grok, xAI's chatbot, was being used to analyze Department of Homeland Security data, "potentially violating conflict-of-interest laws and putting at risk sensitive information on millions of Americans."

OpenAI wins $200 mn contract with US military

San Francisco (United States) (AFP) - The US Department of Defense on Monday awarded OpenAI a $200 million contract to put generative artificial intelligence (AI) to work for the military. San Francisco-based OpenAI will "develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," according to the department's posting of awarded contracts. The program with the defense department is the first partnership under the startup's initiative to put AI to work in governments, according to OpenAI. OpenAI plans to show how cutting-edge AI can vastly improve administrative operations such as how service members get health care and also cyber defenses, the startup said in a post. All use of AI for the military will be consistent with OpenAI usage guidelines, according to the startup. Big tech companies are increasingly pitching their tools to the US military, among them Meta, OpenAI and, more predictably, Palantir, the AI defense company founded by Peter Thiel, the conservative tech billionaire who has played a major role in Silicon Valley's rightward shift. OpenAI and defense tech startup Anduril Industries late last year announced a partnership to develop and deploy AI solutions "for security missions." The alliance brings together OpenAI models and Anduril's military tech platform to ramp up defenses against aerial drones and other "unmanned aircraft systems", according to the companies. "OpenAI builds AI to benefit as many people as possible, and supports US-led efforts to ensure the technology upholds democratic values," OpenAI chief executive Sam Altman said at the time.

OpenAI bags $200M Pentagon contract to explore defense industry AI applications - SiliconANGLE

OpenAI bags $200M Pentagon contract to explore defense industry AI applications OpenAI said today it's working with the U.S. Department of Defense on a pilot program that will see it create "frontier AI" capabilities, but it hasn't divulged exactly what it's building. The DoD confirmed the arrangement in its daily list of newly-awarded contracts on Monday, where it revealed it will award OpenAI up to $200 million for the project, with $2 million being paid up front. "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the DOD said in the document. OpenAI broke the news through a blog post, saying the contract is part of a larger initiative known as "OpenAI for Government", which is all about making the company's advanced artificial intelligence models available to U.S. government agencies. In the post, OpenAI says it will be working on a prototype project that aims to explore "how frontier AI can transform [the DOD's] administrative options", such as by helping service members to apply for healthcare and enhancing its cyber defense capabilities. OpenAI's blog post does not use the word "warfighting", and also points out that any applications of its technology will be consistent with its usage policies and guidelines, which prohibit it from being used to develop or control weapons systems. Still, if it can enhance the DOD's cyber defense capabilities, that would probably aid in terms of being able to wage war, without technically being a weapon. The U.S. government has shown a keen interest in applying AI technology to defense and other industries in recent months. In December, the DOD signed a $100 million contract with a company called Anduril Industries Inc., which develops hi-tech vehicles and other systems for the military. Weeks earlier, OpenAI's rival Anthropic PBC said it is working with Amazon Web Services Inc. and Palantir Technologies Inc. to supply its AI models to U.S. defense and intelligence agencies. OpenAI co-founder and Chief Executive Sam Altman told former U.S. National Security Agency chief Paul Nakasone at a public talk in April that the company is "proud to and really wants to engage in national security areas." Last week, OpenAI Chief Product Officer Kevin Weil and former Chief Revenue Officer Bob McGrew were officially sworn into the U.S. Army Reserve and given the rank of lieutenant colonel. They were joined by the Chief Technology Officers of Palantir and Meta Platforms Inc., and will work with the newly-formed Detachment 201: Executive Innovation Corps, a special unit set up to advise the U.S. government on how AI can be used by the military. OpenAI has been cultivating close ties with the government in other ways, with one of the most visible initiatives being Project Stargate, which aims to invest $500 billion in building AI computing infrastructure in the U.S.

OpenAI wins $200 million US defense contract

The work will be primarily performed in and near Washington with an estimated completion date of July 2026, the Pentagon said. OpenAI said last week that its annualised revenue run rate surged to $10 billion as of June, positioning the company to hit its full-year target amid booming AI adoption.ChatGPT maker OpenAI was awarded a $200 million contract to provide the U.S. Defense Department with artificial intelligence tools, the Pentagon said in a statement on Monday. "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the Pentagon said. The work will be primarily performed in and near Washington with an estimated completion date of July 2026, the Pentagon said. OpenAI said last week that its annualised revenue run rate surged to $10 billion as of June, positioning the company to hit its full-year target amid booming AI adoption. OpenAI said in March it would raise up to $40 billion in a new funding round led by SoftBank Group at a $300 billion valuation. OpenAI had 500 million weekly active users as of the end of March. The White House's Office of Management and Budget released new guidance in April directing federal agencies to ensure that the government and "the public benefit from a competitive American AI marketplace." The guidance had exempted national security and defense systems.

OpenAI Wins $200 Million US Defense Contract For AI Warfare Capabilities As The Company Looks To Raise $40 Billion - Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA)

OpenAI has secured a $200 million defense contract to develop artificial intelligence capabilities for national security applications, according to contracts released by the Department of Defense on Monday. What Happened: The Chief Digital and Artificial Intelligence Office awarded the fixed-amount prototype agreement for "frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the Pentagon stated. Work will be performed primarily in the National Capital Region through July 2026. The contract represents OpenAI's largest known government deal as the company simultaneously pursues a $40 billion funding round led by SoftBank Group Corp SFTBY. Reuters reported that Saudi Arabia's Public Investment Fund and India's Reliance Industries could each contribute several hundred million dollars to the financing. OpenAI's revenue growth has accelerated dramatically, reaching a $10 billion annualized run rate in June, nearly doubling from $5.5 billion at 2024's end, according to company statements. The figure excludes Microsoft Corp. MSFT licensing revenue and one-time deals. See Also: Treasury Yields Near 5% After Soft Foreign Demand: A Red Flag For Stocks? Why It Matters: ChatGPT usage has surged to 500 million weekly active users as of March, driving the revenue expansion. The company targets $12.7 billion in 2025 revenue after posting a $5 billion loss in 2024. The defense contract coincides with OpenAI's complex $300 billion corporate restructuring into a public-benefit corporation. Delaware's attorney general is independently valuing the nonprofit parent's equity stake, while Microsoft disputes its ownership percentage in the new structure. OpenAI faces a year-end deadline to complete the restructuring or risk losing up to $20 billion from SoftBank. The funding supports AI model development and the $100 billion Stargate infrastructure project, featuring Oracle Corp. ORCL and Nvidia Corp. NVDA GB200 chips, at facilities in Texas. Read Next: Wall Street Roars Back As Iran Signals De-Escalation: Nasdaq 100 Nears All-Time High Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Svet foto / Shutterstock.com MSFTMicrosoft Corp$475.300.07%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum67.56Growth51.63Quality35.92Value13.44Price TrendShortMediumLongOverviewNVDANVIDIA Corp$143.661.19%ORCLOracle Corp$209.52-2.65%SFTBYSoftBank Group Corp$29.703.66%Market News and Data brought to you by Benzinga APIs

OpenAI Wins $200M Pentagon Deal, Leaving Behind Musk's xAI

US Department of Defense plans to launch 'OpenAI for Government' division amid Trump-Musk feud OpenAI has secured a $200 million contract with the US Department of Defense. The new initiative, called OpenAI for Government, aims to bring artificial intelligence into more areas of government operations. The contract is a pilot program awarded through the DoD's Chief Digital and Artificial Intelligence Office. The focus will be on non-combat tasks. These include healthcare, cybersecurity, and data analysis. OpenAI stated that all use cases will adhere to its policies and guidelines.

Sam Altman's OpenAI lands $200M deal with US military to address...

Sam Altman's OpenAI has secured a $200 million contract to provide artificial intelligence support to the US Defense Department. Work on the contract will be primarily performed in Washington DC and is expected to run through July 2026. The deal was announced months after OpenAI first revealed that it would collaborate with tech entrepreneur Palmer Luckey's defense firm Anduril to develop AI for "national security missions." "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the Pentagon said in a statement. The ChatGPT maker's move to work with the US military marked a departure from the company's earlier position. The company's terms of service once contained language stating that its AI products were prohibited for use in "military and warfare" circumstances - but the wording was removed last year. In a blog post alongside the Pentagon's announcement, Altman's firm said it was "launching OpenAI for Government, a new initiative focused on bringing our most advanced AI tools to public servants across the United States." "Our goal is to unlock AI solutions that enhance the capabilities of government workers, help them cut down on the red tape and paperwork, and let them do more of what they come to work each day to do: serve the American people," the blog post said. OpenAI described its $200 million deal with the Pentagon as a "pilot program" meant to "help the Defense Department identify and prototype how frontier AI can transform its administrative operations, from improving how service members and their families get health care, to streamlining how they look at program and acquisition data, to supporting proactive cyber defense." Altman had previously appeared alongside President Trump in January to promote OpenAI's role in a $500 billion "Stargate" project to build out AI data centers and other infrastructure across the US. Elsewhere, OpenAI, which is attempting a complex restructuring of its business, is reportedly at loggerheads with its chief financial backer Microsoft. The Wall Street Journal reported on Monday that OpenAI executives were considering accusing Microsoft of anticompetitive behavior as the restructuring talks cause friction between the two sides. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come," Microsoft and OpenAI said in a joint statement in response to the report.

OpenAI wins $200 million US defense contract

WASHINGTON (Reuters) -ChatGPT maker OpenAI was awarded a $200 million contract to provide the U.S. Defense Department with artificial intelligence tools, the Pentagon said in a statement on Monday. "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains," the Pentagon said. The work will be primarily performed in and near Washington with an estimated completion date of July 2026, the Pentagon said. OpenAI said last week that its annualized revenue run rate surged to $10 billion as of June, positioning the company to hit its full-year target amid booming AI adoption. OpenAI said in March it would raise up to $40 billion in a new funding round led by SoftBank Group at a $300 billion valuation. OpenAI had 500 million weekly active users as of the end of March. The White House's Office of Management and Budget released new guidance in April directing federal agencies to ensure that the government and "the public benefit from a competitive American AI marketplace." The guidance had exempted national security and defense systems. (Reporting by Kanishka Singh in Washington; Editing by Leslie Adler)

OpenAI Gets Pentagon Contract as Tech Companies Eye Defense Sector -- 2nd Update

OpenAI Public Sector was awarded a $200 million contract by the Defense Department to address national security challenges, marking the latest collaboration between Silicon Valley and the Pentagon. The San Francisco company will develop prototype frontier AI designed to help with a range of tasks, the Pentagon said Monday. OpenAI said its tools could help with administrative tasks like improving how service members access healthcare, as well as defense-related work like cybersecurity. The contract was for work with the department's Chief Digital and Artificial Intelligence Office. Most of that work will be performed in the Washington, D.C., area, and has an estimated completion date of July 2026. The contract is part of OpenAI's broader push to support the government's technology efforts, the company said Monday. OpenAI launched a new program, known as OpenAI for Government, that will give federal, state and local governments access to the latest ChatGPT models and customized AI models. The deal comes as technology companies and the Pentagon are becoming increasingly interested in one another. The U.S. government has been looking for cutting-edge technology to keep up with countries such as China, while the tech sector has changed its tune on defense and sees it as a potentially lucrative industry. OpenAI in 2024 changed its policies to allow some collaborations with the military, after previously barring its AI from being used in warfare. Also last year, OpenAI added former National Security Agency chief Paul Nakasone to its board and hired former Pentagon official Sasha Baker to create a team focused on national-security policy. Chief technology officers from OpenAI, Palantir and Meta this month joined an inaugural group of a new Army innovation corps. The Army plans to call on the executives to help with short-term projects in cybersecurity, data analytics and other areas. Write to Adam L. Cataldo at [email protected] and Katherine Hamilton at [email protected]