OpenAI has clinched a $200 million contract with the US Department of Defense, marking its largest and most high-profile entry into the defense technology sector to date. The one-year pilot program, awarded after a competitive process involving a dozen contenders, will see OpenAI develop advanced artificial intelligence solutions to address critical national security challenges across both military and administrative domains. The project will be based primarily in Washington, D.C. and the surrounding National Capital Region, with a completion target of July 2026.

This contract is the first major initiative under OpenAI’s newly launched “OpenAI for Government” division, which aims to consolidate all of the company’s public sector projects—including collaborations with NASA, the National Institutes of Health, the Air Force Research Laboratory, and the Treasury Department—into a unified strategic effort. Through this partnership, OpenAI will work closely with the Pentagon to deploy AI tools that streamline administrative tasks, such as improving healthcare access for service members and strengthening cyber defense capabilities. The technology will also be explored for applications in warfighting, logistics, and decision-making, with the overarching goal of bolstering operational efficiency and national security readiness.

OpenAI has emphasised that all AI prototypes developed under this contract will adhere to its internal usage policies, which prohibit direct applications in weapon systems. The company’s approach is focused on supporting the government’s mission while upholding democratic values and ensuring responsible AI deployment. The launch of the “OpenAI for Government” division also includes the introduction of ChatGPT Gov, a secure version of ChatGPT tailored for government use.

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This milestone comes amid OpenAI’s rapid business growth, with its annual revenue run-rate surpassing $10 billion and a recent $40 billion funding round pushing its valuation to $300 billion. The Pentagon deal is seen as a strategic leap, positioning OpenAI as a central player in the evolving landscape of AI-powered government infrastructure and national security, and putting it in direct competition with established defense technology firms like Palantir.

OpenAI’s recent partnerships, such as its collaboration with Anduril Industries to develop AI-driven anti-drone systems, further highlight its expanding footprint in national security applications. With this contract, OpenAI is set to play a pivotal role in shaping the future of AI in government, security, and public sector innovation, reinforcing the critical importance of private sector expertise in maintaining the United States’ technological edge.

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