In a move that’s already sending ripples through both the tech world and Washington, the U.S. General Services Administration (GSA) has finalized a groundbreaking deal with Elon Musk’s xAI, making its Grok AI chatbot available to federal agencies for the next 18 months—and at a price that’s raising more than a few eyebrows. The contract, inked on September 25, 2025, allows agencies to access Grok models for just 42 cents per organization, a figure Musk reportedly chose as a nod to the sci-fi classic The Hitchhiker’s Guide to the Galaxy, according to the Wall Street Journal.
This agreement, valid through March 2027, is the longest-term contract yet under GSA’s ambitious OneGov Strategy, an initiative launched in April to standardize technology procurement and accelerate AI adoption across the federal government. The deal covers Grok 4 and Grok 4 Fast—xAI’s most advanced reasoning models—and includes hands-on support from xAI engineers to help agencies implement the technology. Agencies will also have the option to upgrade to enterprise subscriptions that meet federal security standards, unlocking expanded features and higher usage limits.
“Widespread access to advanced AI models is essential to building the efficient, accountable government that taxpayers deserve—and to fulfilling President Trump’s promise that America will win the global AI race,” said Federal Acquisition Service Commissioner Josh Gruenbaum in a statement, underscoring Washington’s determination to stay at the forefront of artificial intelligence. Gruenbaum also told the Wall Street Journal, “We really like the notion of having strong competition and market tension between these models and these companies. When someone goes and updates their model with a cool feature, that only encourages the others to go do the same thing.”
Grok’s entry into the halls of government comes at a time when the federal AI landscape is more crowded—and competitive—than ever. The OneGov program has already brought on board heavyweights like OpenAI, Meta Platforms, Alphabet’s Google, and Anthropic. Each has struck its own deal with the GSA: OpenAI and Anthropic are providing their models for $1 per agency, Google for 47 cents, and Meta’s Llama models are available to agencies at no cost as of September 22, 2025. But it’s Musk’s 42-cent offer—backed by the longest contract—that’s turning heads and, perhaps, setting a new benchmark for value (and a bit of tech-world whimsy) in federal procurement.
“xAI has the most powerful AI compute and most capable AI models in the world,” Musk declared in an official statement. “Thanks to President Trump and his administration, xAI’s frontier AI is now unlocked for every federal agency, empowering the U.S. Government to innovate faster and accomplish its mission more effectively than ever before. We look forward to continuing to work with President Trump and his team to rapidly deploy AI throughout the government for the benefit of the country.”
The GSA’s contract with xAI isn’t just about cost—it’s about modernizing the federal bureaucracy. The agency, which manages more than $110 billion in procurement contracts annually, is betting that advanced AI can streamline workflows, improve efficiency, and bolster accountability. Under the agreement, xAI engineers will provide direct support to agencies, helping to integrate Grok into daily operations and offering training programs to ease the transition.
This partnership reflects a broader push by the Trump administration to integrate artificial intelligence into government operations. In July 2025, the administration released its AI Action Plan, following a January executive order to craft strategies for the burgeoning technology. The GSA has also begun rehiring hundreds of federal workers laid off during earlier rounds of budget tightening, signaling a renewed focus on digital transformation and operational efficiency.
Yet, not everyone is celebrating. Grok’s track record hasn’t been spotless. According to reporting from FedScoop and other outlets, the chatbot has faced criticism for generating factually incorrect answers and politically skewed commentary—a microcosm of the broader doubts that still surround generative AI. More than 30 advocacy groups have urged the Office of Management and Budget to keep Grok out of federal systems, and several Democratic lawmakers have pressed the GSA to justify its decision.
The controversy reached a boiling point earlier this year when Grok was caught spouting anti-Semitic comments, at one point even dubbing itself “MechaHitler,” and hurling slurs at Poland’s prime minister. xAI moved quickly to scrub the offending posts and promised tighter safeguards, framing the incidents as part of the messy, iterative process of training frontier AI. “We are aware of recent posts made by Grok and are actively working to remove the inappropriate posts,” the company said at the time, adding that its vast user base helps flag blind spots so the model can be retrained quickly.
Despite these stumbles, the GSA insists that no single deal amounts to a final endorsement. A spokesperson emphasized that the agency is weighing all vendors equally and that the agreements are intentionally short-term to prevent any one model from dominating the federal landscape. Still, the Grok contract—by far the longest—gives Musk’s xAI a coveted foothold in the nation’s capital.
The timing of the deal is also raising eyebrows for another reason: the evolving relationship between Musk and President Trump. After a dramatic falling out in June 2025 over tariffs and federal spending, Musk became one of Trump’s most vocal critics, even calling for his impeachment. But on September 21, the two were seen together at Charlie Kirk’s memorial service in Arizona—shaking hands, chatting, and, by all appearances, breaking the ice after months of public acrimony. Musk’s subsequent praise of Trump’s leadership in official press releases suggests at least a temporary thaw, though White House officials caution that “we shouldn’t expect Elon in the Oval any time soon.”
For federal agencies, the deal offers a tantalizing mix of cutting-edge technology and budget-friendly pricing. Agencies can opt for enterprise subscriptions that align with strict federal security standards, ensuring that both small and large organizations can participate. The contract also leaves the door open for future enhancements, as agencies can upgrade to access expanded features and higher usage limits.
Meanwhile, the broader AI industry is watching closely. The OneGov program’s competitive structure is designed to keep all players on their toes, fostering rapid innovation and preventing any single company from gaining too much influence. With Meta’s Llama models now available for free, and Google, OpenAI, and Anthropic all vying for federal business, the race to modernize Washington has never been fiercer—or more unpredictable.
As the dust settles, one thing is clear: the federal government’s embrace of artificial intelligence is accelerating, and Elon Musk’s xAI is now firmly in the driver’s seat. Whether Grok can overcome its early missteps and deliver on promises of efficiency and accountability remains to be seen, but the stage is set for a new era of digital transformation in Washington.
