Greetings from Cannes, where everyone’s either terrified of AI or trying to sell it. I know I’m supposed to say something inspirational about creativity, but let’s talk about something that has the potential to be truly terrifying.
OpenAI has been awarded a $200 million contract by the U.S. Department of Defense to develop prototype frontier AI capabilities for national security use. According to the official DoD announcement, the contract is a fixed amount, prototype, "other" transaction agreement awarded under the Office of the Secretary of Defense’s Chief Digital and Artificial Intelligence Office (CDAO).
The project is designed to address “critical national security challenges in both warfighting and enterprise domains.” The work will be conducted primarily in the National Capital Region, with an expected completion date of July 2026. An initial $2 million in FY25 research, development, test, and evaluation funds have been obligated at the time of the award.
This is one of the highest-value government contracts OpenAI has received. The deal falls under the CDAO’s mandate to accelerate AI adoption across the Department of Defense, with OpenAI joining a growing roster of commercial tech firms tapped to modernize military infrastructure through artificial intelligence.
The announcement follows OpenAI’s launch of “OpenAI for Government,” a broader initiative aimed at providing its models to federal, state, and local agencies. While OpenAI’s current usage policies prohibit the use of its tools to build weapons or cause harm, the company has revised its stance on military partnerships since removing its explicit ban on “military and warfare” applications in early 2024.
This contract highlights the Pentagon’s commitment to leveraging commercial AI to support defense readiness. It should surprise no one.
As always your thoughts and comments are both welcome and encouraged. -s
About Shelly Palmer
Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications and CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named LinkedIn’s “Top Voice in Technology,” he covers tech and business for Good Day New York, is a regular commentator on CNN and writes a popular daily business blog. He's a bestselling author, and the creator of the popular, free online course, Generative AI for Execs. Follow @shellypalmer or visit shellypalmer.com.
