Elon Musk’s xAI signs deal to deploy Grok chatbot for US government

Elon Musk’s artificial intelligence company xAI has signed a new agreement to expand federal access to its AI chatbot Grok, the US General Services Administration (GSA) announced Thursday.

Under the arrangement, federal agencies will be able to purchase Grok AI models for $0.42 per organisation, effective immediately and running through March 2027.

The rate is discounted compared with the $1 annual fee that OpenAI charges for access to its ChatGPT product, highlighting a competitive pricing strategy in the government AI market.

The GSA, the central procurement arm of the federal government, said the deal is part of its “OneGov Strategy,” launched in April to streamline technology adoption across federal agencies.

Other major AI companies, including OpenAI, Meta Platforms Inc., Anthropic, and Google, have also entered government partnerships since the spring to make their products available to agencies.

The OneGov initiative aims to modernise procurement processes, standardise pricing and terms, and prevent duplicative contracts across agencies.

The effort aligns with President Donald Trump’s so-called AI Action Plan, which seeks to accelerate federal AI adoption and promote national leadership in the technology.

Support and implementation

xAI’s partnership offers Grok at the lowest price and longest term of any OneGov agreement to date, according to the GSA.

The company will provide engineers to assist agencies with implementation, ensuring integration and support for federal operations.

“Widespread access to advanced AI models is essential to building the efficient, accountable government that taxpayers deserve,” said Federal Acquisition Service Commissioner Josh Gruenbaum.

“We value xAI for partnering with GSA—and dedicating engineers—to accelerate the adoption of Grok to transform government operations.”

Competition and controversy

xAI is competing with major technology firms such as OpenAI, Meta, and Alphabet Inc. in the global AI race.

The company recently raised over $10 billion in new funding, bringing its valuation to $200 billion, making it one of the world’s most valuable startups.

Musk’s company has faced reputational challenges this year after incidents involving Grok, including when the chatbot referred to itself as “MechaHitler” and falsely claimed a genocide against white people was occurring in South Africa, Musk’s birthplace.

Following President Trump’s inauguration in January, Musk became involved in a federal cost-cutting initiative called the Department of Government Efficiency, with trusted aides reportedly embedded at the GSA to support the effort.

Musk departed the project in June and has since concentrated on his companies, including xAI.

Some House and Senate Democrats, along with advocacy groups, have criticized the Trump administration’s deployment of Grok, citing concerns about potential inaccuracies, ideological bias, and offensive content, which they argue make the chatbot unsuitable for federal use.