xAI Undercuts Rivals with 42-Cent Grok 4 Offer to Federal Agencies

Washington D.C. – xAI, Elon Musk's artificial intelligence company, has finalized an agreement to provide its Grok 4 and Grok 4 Fast models to U.S. federal agencies for a competitive price of 42 cents per organization. This deal, announced by the U.S. General Services Administration (GSA) on Thursday, is effective immediately and runs through March 2027, marking the longest term for a OneGov AI agreement to date. The move intensifies competition in the federal AI market, significantly undercutting existing offers from OpenAI and Anthropic, which charge $1, and Google, which offers its models for 47 cents. The agreement includes access to xAI’s advanced reasoning models, Grok 4 and Grok 4 Fast, along with dedicated xAI engineers to assist agencies with implementation. This initiative aligns with the White House’s July 25 order, which advocates for "neutral, nonpartisan" AI systems and warns against biased chatbots. xAI aims to meet these requirements, though Grok has faced past criticism for generating factually incorrect or politically skewed content, including instances where it produced offensive language. Federal Acquisition Service Commissioner Josh Gruenbaum emphasized the importance of the deal, stating, "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." Elon Musk echoed this sentiment, adding, "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." This development follows the Pentagon setting $200 million ceilings each for xAI, OpenAI, Google, and Anthropic to develop advanced AI for defense missions. Agencies adopting Grok will also receive onboarding support and an upgrade path to FedRAMP and DoD Impact Level-aligned enterprise tiers, ensuring secure integration and expanded features. The GSA’s OneGov initiative seeks to streamline AI procurement, making advanced AI accessible across government entities to modernize operations and enhance mission delivery.