OpenAI is amping up its collaboration with the US government.
The US Department of Defense said Monday that OpenAI was awarded a $200 million contract to develop AI tools for military and national security applications, primarily in the National Capital Region, which includes Washington, DC.
“Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains,” said the Department of Defense.
“This contract was a competitive acquisition and 12 offers were received,” the DoD added.
The one-year deal marks the company’s first official defense contract, but this isn’t the first time OpenAI has worked with the government.
Shortly following news of the government contract, OpenAI revealed its “OpenAI for Government” initiative, which brings all its existing government collaborations under the same umbrella. According to an OpenAI blog post, this initiative could change everything from how service members get healthcare to supporting cyber defense.
“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 wrote on its blog.
In December, OpenAI said it partnered with defense tech startup Anduril to deploy AI systems for “national security missions” such as “the nation’s counter-unmanned aircraft systems.”
In January, CEO Sam Altman appeared alongside President Donald Trump at the White House to unveil the $500 billion “Stargate” project, which aims to build domestic AI infrastructure.
Altman told former NSA chief Paul Nakasone in a public conversation in April that the company is “proud to and really want to engage in national security areas.”
Other AI rivals have also been competing for government contracts. Anthropic announced back in November that it would team up with Amazon Web Services and Palantir to provide US intelligence and defense agencies with its Claude AI models.
Analysts at the financial services company William Blair wrote in a note following news of the contract that OpenAI has one of the largest Department of Defense contracts ever given to a software provider when measured by annual contract value.
The note added that for context, Palantir Technologies, which is a prominent defense software company, has an annual recurring revenue rate of $210 million with the Department of Defense for an AI program that processes drone imagery and full-motion videos.
“Today’s contract announcement could signal increased competition from OpenAI going forward if OpenAI moves into Palantir’s ontology territory,” William Blair analysts added. “We would not be surprised if Palantir shares traded lower tomorrow, given its recent run, rich valuation, and the signs of competitive pressure.”
However, William Blair analysts mentioned that there is a possibility that OpenAI is collaborating with Palantir instead. Many details of what the contract consists of still remain unclear.
Palantir did not immediately respond to a request for comments.
