Elon Musk’s xAI Secures U.S. Government Contract for Grok AI Models Through 2027

Elon Musk's artificial intelligence venture, xAI, has inked a deal with the U.S. General Services Administration to supply federal agencies with its Grok 4 and Grok 4 Fast AI models until March 2027. Priced at $0.42 per unit, the offering undercuts OpenAI's government-tailored ChatGPT by more than half, positioning xAI as a cost-effective alternative for public sector AI adoption.

The agreement, part of the GSA's OneGov initiative, includes engineering support from xAI to facilitate implementation across federal workflows. Enterprise subscription options will comply with stringent national security standards, reflecting growing institutional demand for AI solutions that balance innovation with regulatory requirements.

Musk framed the partnership as a modernization catalyst, praising the TRUMP administration while positioning Grok as an accelerator for government innovation. The move signals increasing competition in the institutional AI market, where pricing and security compliance are becoming key differentiators.