US Government Signs Deal To Use Elon Musk's Grok AI For A Crazy Cheap Price

The U.S. government has struck an agreement with Elon Musk's artificial intelligence company xAI to provide federal agencies access to its Grok AI models. The agreement gives the government access for just $0.42 per agency, which is one of the lowest rates seen yet in this wave of government AI procurement. Compare the $0.42-per-agency price to rivals OpenAI and Anthropic, both of which have been offering government-focused models for around $1 per agency. Meta, by comparison, agreed to provide AI services at zero cost.

The deal comes as part of the General Services Administration (GSA)'s "OneGov" initiative, which wants to modernize how the federal government acquires its goods and services in the cyber space. Grok 4 and Grok 4 Fast will be available across all federal agencies immediately, and they'll be around for the next 18 months until the contract expires in March 2027. It also includes dedicated engineers from xAI to help the federal agencies implement the AI models.

The partnership is sure to be closely watched as its implementation rolls out. Civil liberties organizations have long been wary of the apparent ideological bias in Grok's responses. Earlier this year, the chatbot posted antisemitic content on X, even briefly renaming itself "MechaHitler." Such responses would be gross violations of Trump's AI Action Plan, which calls for government-used AI to remain neutral and nonpartisan.

Lawmakers have raised their own questions about Grok's security and oversight, not to mention all the other AI models like Anthropic AI and ChatGPT being brought under the federal umbrella. The GSA has recently signed similar agreements with other AI firms including Meta, Google, Anthropic, and OpenAI, meaning Grok is far from the only AI model being used by the federal government today. The contract does provide agencies with upgrade paths to higher-security Grok subscriptions aligned with FedRAMP and Department of Defense Impact Levels, so time will tell how truly secure those prove to be.

According to a report by Wired, internal emails from White House officials reveal that the GSA was urged to approve Grok "ASAP" back in late August. And as we know, Musk and Trump were once close allies, with Musk heading the Department of Government Efficiency (DOGE) after Trump's inauguration. Their relationship soured after Musk stepped down and criticized aspects of the administration, leading to a public falling out. Recent appearances of the two together — as well as this sudden rush to bring Grok into the federal fold — have fueled speculation that the relationship may be on the mend.

Critics have questioned whether Musk's role in shaping federal policy, particularly through allies placed in government agencies during his time at DOGE, could have given Elon Musk-owned companies an advantage over competitors. A GSA spokesperson told TechCrunch, however, that Musk was not directly involved in negotiating the agreement. The administration has framed the deal simply as a cost-saving measure that will improve efficiency across government operations.