OpenAI Secures $200 Million Pentagon Contract for AI Tools

The U.S. Department of Defense has awarded a $200 million contract to OpenAI, marking the company’s first publicly listed agreement with the Pentagon. The one-year contract will focus on developing prototype artificial intelligence capabilities for both warfighting and government operations.

Announced Monday, the award follows OpenAI’s growing involvement in national security technology and formalizes its work with U.S. agencies through a new initiative called OpenAI for Government. Most of the contracted work will take place in the National Capital Region, including Washington, D.C., and surrounding areas in Maryland and Virginia.

According to a Pentagon statement, the project will “develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains.”

Partnership with Anduril, Launch of OpenAI for Government

The contract comes months after OpenAI revealed a partnership with defense startup Anduril, aimed at deploying AI systems for “national security missions.” Anduril itself secured a $100 million defense contract in December.

This collaboration now expands into a broader platform: OpenAI for Government, which includes a specialized version of ChatGPT called ChatGPT Gov. In a blog post, OpenAI described the contract as the “first arrangement” under this new initiative.

“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.

OpenAI emphasized that all applications must align with its internal usage policies and guidelines.

Defense Tech Landscape: OpenAI, Anthropic, Microsoft

OpenAI joins a growing list of AI companies securing contracts with U.S. defense and intelligence agencies. In recent months:

• Anthropic announced partnerships with Palantir and Amazon to offer its AI models for defense use.
  

• Microsoft, OpenAI’s infrastructure partner, confirmed in April that its Azure OpenAI service had been cleared to handle secret-level classified information by the Defense Information Systems Agency.

Sam Altman, OpenAI CEO, publicly endorsed this direction in April during a conversation with former NSA director and OpenAI board member Paul Nakasone. Speaking at a Vanderbilt University event, Altman said, “We have to and are proud to and really want to engage in national security areas.”

Strategic Expansion and Revenue Impact

The new contract represents a small portion of OpenAI’s broader business. The company currently generates over $10 billion in annualized sales and in March announced a new $40 billion financing round, reportedly valuing the company at $300 billion.

Separately, OpenAI is working to expand its AI infrastructure through the Stargate project, a $500 billion public-private initiative to build computing capacity in the U.S. The plan was unveiled in January with Altman and former President Donald Trump at the White House.

The Defense Department listed the contract under OpenAI Public Sector LLC, a dedicated entity for handling government work.

What This Means

The contract signals OpenAI’s formal entry into defense contracting at a scale that could reshape how U.S. agencies adopt and experiment with cutting-edge AI. By creating a dedicated public sector division and setting firm usage policies, OpenAI is moving to balance public concerns about AI militarization with a desire to influence how national security uses are developed and governed.

As leading AI firms align more closely with defense agencies, the contracts they sign may do more than supply new tools—they could shape the values, limits, and accountability frameworks that define how AI is used in power and conflict.

Editor’s Note: This article was created by Alicia Shapiro, CMO of AiNews.com, with writing, image, and idea-generation support from ChatGPT, an AI assistant. However, the final perspective and editorial choices are solely Alicia Shapiro’s. Special thanks to ChatGPT for assistance with research and editorial support in crafting this article.