The U.S. defense and security forces are stocking up on artificial intelligence, recruiting hundreds of companies to develop and securely test new artificial intelligence algorithms and tools, according to an analysis by Fortune magazine. In the two years since OpenAI released its ChatGPT chatbot, sparking the global obsession with artificial intelligence, the U.S. Department of Defense has awarded approximately $670 million in contracts to nearly 323 companies for a range of artificial intelligence projects. Looking at the number of companies working with the Department of Defense and the total value of contracts, these figures represent a 20% increase from 2021 and 2022.
The Department of Homeland Security awarded an additional $22 million in contracts to 20 companies doing similar work in 2022 and 2023, more than triple the amount in the previous two years.
Fortune analyzed public contract award and related spending data on artificial intelligence and generative artificial intelligence work from the two government agencies. Among the artificial intelligence companies working with the military, there are both well-known technology contractors like Palantir and young startups like ScaleAI.
While the military has long supported the development of cutting-edge technologies, including artificial intelligence, spending has risen as investors and businesses increasingly bet on AI's potential to transform society.
The largest Defense Department contract designated to use artificial intelligence since fiscal 2023 is a $117 million payment to ECS, a subsidiary of IT management and consulting firm ASGN Inc. The contract is for "research and development efforts to design and develop prototypes of artificial/machine learning algorithms" for the U.S. Army. However, according to online records, the total contract value has exceeded the original award amount and reached $174 million.
The second largest DoD contract, at $91 million, was paid to Palantir, a company that also works for the Army, to "test end-to-end artificial intelligence approaches for defense use cases." While Palantir was awarded a $480 million contract earlier this year to expand the military's use of its data visualization tool Maven Intelligence System over the next five years, Defense Department records did not explicitly indicate in government records that the contract was related to artificial intelligence or generative AI. This contract is also an IDV contract and is therefore cataloged separately from regular government contract awards. The only delivery order currently under the IDV is for Palantir to provide $70 million to create a new "user interface/user experience" for the Maven system.
The Department of Defense also has 83 additional active contracts with various companies and entities for generative AI work and projects that are designated as "Indefinite Delivery Vehicles," or IDVs, meaning the work ordered and delivery schedules are subject to change. The potential value of these contracts ranges from $4 million to $60 million. If these additional contracts are paid out at a few million dollars each, by next year the Department of Defense will have spent more than $1 billion on hundreds of AI projects at hundreds of companies.
One of the IDV projects is with ScaleAI, which could see the Department of Defense pay $15 million to test and evaluate artificial intelligence tools for the U.S. Army. Scale is a "preferred partner" of OpenAI, and its investors include Thrive (a major backer of OpenAI), Amazon, Meta, and several others.
A Defense Department spokesman declined to comment. A representative for the Department of Homeland Security did not respond to an email seeking comment.
The other two contracts will pay $33 million to Moresecorp and $15 million to MileTwo LLC. Morsecorp, a company focused on autonomous vehicle technology, is conducting "artificial intelligence/machine learning exponential speed" testing and evaluation for the Army. MileTwo develops software and creates "artificial intelligence-enhanced workflows" for the Air Force. Most contracts range from $1 million to $10 million, but there are dozens for less than $500,000.
The largest DHS contract is for a much smaller $4 million, going to marketing firm LMD to provide unspecified "marketing and artificial intelligence services" to the U.S. Coast Guard. The same company is also responsible for the "See Something, Say Something" campaign through the Department of Homeland Security. LMD also has a $3 million contract for similar services. Additionally, two contracts worth more than $3 million each were awarded to technology consulting and analytics firm Noblis Inc. to provide artificial intelligence analytics and support to the Office of Procurement Operations.