The U.S. Department of Defense has signed a $200 million contract with OpenAI to build cutting-edge artificial intelligence tools specifically for military and national security operations.
According to the Pentagon, the contract mandates the development of “prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains.”
The project will largely be carried out in and around Washington, D.C., and is expected to run through July 2026.
This deal is OpenAI’s most consequential entry yet into the world of defence technology. With cases around global military AI development, particularly between the U.S., China, and Russia, Washington appears determined to push ahead with strategic AI applications, even as regulatory issues around commercial AI increases.
Again, this contract falls outside the purview of recent guidelines issued by the White House Office of Management and Budget (OMB), which had in April 2025 instructed federal agencies to promote a “competitive American AI marketplace.”
That directive, however, exempted national security and defence initiatives, allowing the Pentagon to move quickly without standard civilian oversight.
While the Pentagon has not publicly disclosed the specifics of the technology under development, “frontier AI” in this context is widely understood to refer to advanced models capable of autonomous analysis, rapid threat identification, predictive decision-making, and secure battlefield communications.
This is a big one for OpenAI. Founded with the vision of building general-purpose AI that benefits humanity, the company is now committing resources to meet military-grade demands.
The result for AI ethics and transparency in defence applications is not yet known, especially as these technologies begin to influence sensitive global security infrastructure.
Just last week, OpenAI revealed that its annualised revenue run rate had surged to $10 billion as of June 2025, nearly doubling from $5.5 billion just six months earlier.
The company is reportedly on pace to generate $12.7 billion by the end of the year, excluding its licensing revenue from Microsoft and major one-off deals.
Earlier in March, OpenAI also began raising up to $40 billion in fresh capital, in a funding round led by Japan’s SoftBank. That round, valuing the firm at $300 billion, ranks among the largest private tech raises in history.
As of March 2025, the company claimed 500 million weekly active users, showing an astonishing scale of global engagement.
Now, with military-grade contracts, OpenAI’s drive is moving in real-time, and so are the debates about who controls the future of artificial intelligence, and to what ends.
