Elon Musk's xAI to provide Grok chatbot to U.S. federal agencies – The Commercial Appeal
Elon Musk’s xAI has struck a deal with the U.S. General Services Administration (GSA) to provide the artificial intelligence startup’s Grok chatbot to federal agencies, the government’s procurement arm said on Sept. 25.
The contract underscores Washington’s push to expand the use of AI in government operations, while intensifying competition among leading developers of the booming technology for federal business.
The agreement, effective through March 2027, allows agencies to buy Grok models for 42 cents per organization, compared with the $1 per year OpenAI charges for access to its ChatGPT service, GSA said.
The contract covers Grok 4 and Grok 4 Fast, which xAI describes as its most advanced reasoning models. The agency said xAI engineers would also assist agencies with implementation.
Agencies will also have the option to upgrade to Grok enterprise subscriptions aligned with federal security standards, offering expanded features and higher usage limits.
However, critics have said Grok has generated factually wrong answers and politically skewed commentary, reflecting broader doubts over the reliability of generative AI.
Advocacy groups have flagged episodes where the system produced offensive language or conspiracy-tinged claims, prompting questions about the safeguards built into its algorithms.
The deal is the latest under GSA’s “OneGov Strategy,” launched in April to standardize technology procurement and expand government use of AI. Other suppliers under the program include OpenAI, Meta Platforms META.O, Alphabet’s GOOGL.O Google and Anthropic.
GSA has also approved Meta’s Llama model for agency use earlier this week, making it available to federal customers at no cost.
xAI’s Grok large language model is powered by the company’s Colossus data centers located in Memphis. In June 2024, xAI announced plans for its Colossus supercomputer at the former Electrolux facility at 3231 Paul R. Lowry Road.
The company is also building a second data center, Colossus 2, in South Memphis at 5420 Tulane Road. In July, Musk posted on X that Colossus 2 will have 550,000 graphic processing units (GPUs) at launch and would come “online in a few weeks.”
In February, xAI affiliate, CTC Property LLC, purchased 186.13 acres, between three parcels, along Tulane Road, where Colossus 2 is located. Those parcels are located at 5408, 5414 and 5420 Tulane Road. On July 27, CTC Property transferred ownership to xAI affiliate, MZX Tech LLC, according to the Shelby County Register of Deeds.
On July 16, MZX Tech LLC purchased the former Duke Energy site in Southaven, Mississippi, which is located about 1.5 miles south of the Tulane Road properties and Colossus 2.
Reuters Akash Sriram and Commercial Appeal reporter Neil Strebig contributed to this report.
