When the Pentagon announced last summer that it had awarded $200 million AI contracts to four frontier technology companies, one name stood out: Elon Musk’s xAI. Now, with Grok cleared for the military’s most sensitive classified networks, questions about how that contract materialized — and who benefits — are back.
Musk led the Department of Government Efficiency as a senior White House adviser until stepping back from the role in mid-2025 — and owns xAI, the company that just reached the highest tier of government AI contracting. The overlap between those two roles has never been publicly addressed by the administration.
Read: Pentagon Awards $200M AI Contract to Musk’s xAI Days After Grok Called Itself ‘MechaHitler’
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NBC News reported in July 2025 that xAI was a last-minute addition to a program that had been in development since the Biden administration. Glenn Parham, a former AI technical lead at the Pentagon’s Chief Digital and Artificial Intelligence Office, said there had been no discussions with anyone from X or xAI before he left in March 2025 — months before the contract was announced.
A former Pentagon contracting official told NBC News the award “came out of nowhere,” and that xAI lacked “the kind of reputation or track record that typically leads to lucrative government contracts.”
Federal conflict-of-interest laws bar government employees from participating in matters where they or their companies hold a financial interest. Reuters reported in May 2025 that DOGE staff spent months pushing federal agencies to adopt Grok despite the system lacking standard government approval.
Richard Painter, former chief White House ethics lawyer under President George W. Bush, said the arrangement “gives the appearance that DOGE is pressuring agencies to use software to enrich Musk and xAI.”
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Sen. Elizabeth Warren wrote to the Pentagon in September 2025, demanding answers on whether Musk discussed the contract during his government tenure and whether it underwent a DOGE review. The Defense Department did not respond publicly.
The classified deal also landed the same day Hegseth summoned Anthropic CEO Dario Amodei to the Pentagon and threatened to brand the company a “supply chain risk” — with xAI now first in line to fill the gap if Anthropic is forced out.
Musk has publicly dismissed safety-focused rivals like Anthropic and OpenAI as “woke,” and xAI accepted the Pentagon’s “all lawful purposes” standard without the guardrails Anthropic is refusing to drop.
Days before the original contract announcement, Grok generated a wave of antisemitic content, at one point referring to itself as “MechaHitler.” Senate Minority Leader Chuck Schumer called the contract “wrong” and “dangerous” on the Senate floor.
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