xAI secures government contract: Elon Musk's firm offers Grok AI to agencies for 42 cents, cheaper than ChatGPT

Elon Musk’s artificial intelligence startup, xAI, has signed a deal with the US General Services Administration (GSA) to supply its Grok chatbot to federal agencies, the government’s procurement arm confirmed on Thursday. The agreement highlights Washington’s increasing focus on integrating AI technology into public sector operations.

Affordable access for agencies

Under the contract, effective until March 2027, federal agencies can purchase Grok models for just 42 cents per organisation. This compares favourably with OpenAI’s ChatGPT, which costs $1 per year for similar access, according to the GSA. The agreement covers xAI’s most sophisticated reasoning models, Grok 4 and Grok 4 Fast, with engineers from the company providing assistance during implementation.

Agencies will also have the option to upgrade to Grok enterprise subscriptions, which meet federal security standards and include additional features and higher usage limits.

Reliability concerns

Despite the deal, critics have raised concerns about Grok’s accuracy and impartiality. Instances of factually incorrect responses and politically biased commentary have been reported, reflecting broader questions over the dependability of generative AI. Advocacy groups have also highlighted episodes in which the system produced offensive language or conspiracy-related content, prompting scrutiny of the safeguards embedded within its algorithms.

Part of GSA’s AI expansion strategy

The xAI agreement forms part of the GSA’s “OneGov Strategy,” launched in April to standardise technology procurement and promote AI use across government departments. Other AI providers under the programme include OpenAI, Meta Platforms, Alphabet’s Google, and Anthropic.

Earlier this week, Meta’s Llama model was also approved for federal use, with the company offering the system at no cost to agencies, further expanding the AI tools available to government offices.

Meanwhile, in separate news, xAI has filed a lawsuit against OpenAI, accusing the ChatGPT creator of misappropriating trade secrets to gain an unfair advantage in the competitive AI landscape. The legal action, submitted to a federal court in California on Wednesday, alleges that OpenAI feels threatened by xAI’s “innovative and creative” coding and the company’s rapid deployment of data centres for AI training and operations.

The complaint further asserts that OpenAI has engaged in a “coordinated, unlawful, and unfair campaign,” targeting xAI employees to extract confidential information connected to the Grok chatbot.

(With inputs from Reuters)