US Defense and Security Forces are Stocking Up on Artificial Intelligence and Enlisting Hundreds of Companies to Develop and Security Test New AI Algorithms and tools, according to a Fortune analysis.
In the two years since OpenAI released the ChatGPT chatbot, which started a global obsession with all things AI, the Department of Defense has awarded roughly $670 million in contracts to nearly 323 companies to work on a series of AI projects. The figures represent a 20% increase over 2021 and 2022, measured by both the number of companies working with the Ministry of Defense and the total value of contracts.
The Department of Homeland Security has awarded another $22 million in contracts in 2022 and 2023 to 20 companies doing similar work, more than triple what it spent in the previous two-year period.
Fortune analyzed publicly available contract awards and related spending data for both government agencies related to AI and generative AI work. AI companies working with the military include well-known tech companies like Palantir, as well as younger startups like Scale AI.
While the military has long supported the development of advanced technology, including AI, the increase in spending comes as investors and companies increasingly bet on AI’s potential to transform society.
The largest DOD contract specifying AI since fiscal year 2023 is the $117 million paid to ECS, a subsidiary of ASGN Inc, an IT management and consulting company. The contract is for a “research and development effort to design and develop prototypes for artificial/machine learning algorithms” for the US military. However, the total contract amount payable has grown above the original award amount to $174 million, according to online data.
The second largest DOD contract was paid to Palantir for $91 million so that the company would “test an end-to-end approach to artificial intelligence for defense matters,” including for the military. While Palantir earlier this year received a contract worth potentially $480 million over the next five years to expand military access to its Maven Smart System, a data visualization tool, the DOD does not specify it in government documents as related to AI or generative AI. The contract is also an IDV and is therefore cataloged separately from regular government contract awards. The only current supply order under this IDV is for $70 million for Palantir to create a new “user interface/experience” for the Maven system.
The DOD has another 83 active contracts with various companies and entities for generative AI work and projects specified as “indefinite delivery vehicles,” or IDV, meaning the work ordered and delivery schedules are subject to change. The potential amount of these prizes individually ranges from $4 million to $60 million. Should these additional contracts all be paid out for even a few million dollars each, the department will spend well over a billion dollars next year on hundreds of AI projects at as many companies.
One of those IDVs is from Scale AI and may be worth $15 million in payments from DOD for testing and evaluating AI tools for the US military. Scale is a “preferred partner” of OpenAI and its investors include Thrive, a major backer of OpenAI, as well as Amazon, Meta and several others.
A DOD spokesperson declined to comment. A DHS representative did not respond to an email seeking comment.
Two more contracts are being paid out: $33 million goes to Moresecorp Inc. and $15 million to Mile Two LLC. Morsecorp, a company focused on autonomous vehicle technology, is conducting tests and evaluations “for the exponential pace of artificial intelligence/machine learning” for the military. Mile Two builds software and creates “artificial intelligence-enhanced workflows” for the Air Force. The majority of contract awards range from $1 million to $10 million, although there are dozens under $500,000.
The largest DHS contract is considerably smaller: $4 million goes to the marketing firm LMD for unspecified “marketing and artificial intelligence services” for the U.S. Coast Guard. The same company is responsible for the “If You See Something, Say Something” campaign, produced through DHS. LMD has a second contract worth $3 million for similar services. Two additional contracts worth more than $3 million each have also been paid to Noblis Inc., a technology consulting and analytics company, to perform AI analytics and support for the Office of Procurement Operations.
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