OpenAI Inks Pentagon Deal as US Bans Anthropic
OpenAI has secured a landmark contract to be the primary AI provider for the Pentagon, just hours after the Trump administration banned competitor Anthropic from all federal use. The administration designated Anthropic a “supply chain risk,” a move that effectively clears the field for OpenAI in the defense sector. CEO Sam Altman said the deal includes unspecified "technical safeguards."
The financial terms of the OpenAI contract could reach up to $200 million, focusing on developing "prototype frontier AI capabilities" for both "warfighting and enterprise domains". This deal is a significant policy shift for OpenAI, which until early 2024 had a public policy that banned any military work. The project's estimated completion date is July 2026. OpenAI's agreement includes specific "red lines" to prevent its technology from being used for mass domestic surveillance, to direct autonomous weapons, or for high-stakes automated decisions. The company stated its safeguards include retaining full control over its safety stack, deploying via the cloud with cleared OpenAI personnel involved, and strong contractual protections. Any breach of these terms by the government could trigger a termination of the contract. The core of the dispute with Anthropic was its refusal to remove safeguards that prohibit its AI from being used for mass surveillance or fully autonomous weapons. In response, Defense Secretary Pete Hegseth stated the Pentagon "must have full, unrestricted access to Anthropic's models for every LAWFUL purpose". The "supply chain risk" designation for Anthropic is an unprecedented action, a label historically reserved for companies from adversary nations like China's Huawei. The designation means that no contractor, supplier, or partner doing business with the U.S. military can have any commercial activity with Anthropic. Anthropic has announced its intention to challenge the designation in court, calling the move "legally unsound" and a "dangerous precedent". The company argued that the Defense Secretary does not have the statutory authority to ban all military contractors from doing business with it. In a show of solidarity, hundreds of employees from Google DeepMind and OpenAI signed an open letter urging their companies to stand with Anthropic. OpenAI CEO Sam Altman also stated that his company shares the same red lines as Anthropic regarding the use of AI. The Trump administration has given federal agencies a six-month period to phase out their use of Anthropic's technology. President Trump threatened "major civil and criminal consequences" if Anthropic does not cooperate with the transition.
