Sept 25 (Reuters) - Elon Musk's xAI has struck a deal

with the U.S. General Services Administration (GSA) to provide

the artificial intelligence startup's Grok chatbot to federal

agencies, the government's procurement arm said on Thursday.

The contract underscores Washington's push to expand the use

of AI in government operations, while intensifying competition

among leading developers of the booming technology for federal

business.

The agreement, effective through March 2027, allows agencies

to buy Grok models for 42 cents per organization, compared with

the $1 per year OpenAI charges for access to its ChatGPT

service, GSA said.

The contract covers Grok 4 and Grok 4 Fast, which xAI

describes as its most advanced reasoning models. The agency said

xAI engineers would also assist agencies with implementation.

Agencies will also have the option to upgrade to Grok

enterprise subscriptions aligned with federal security

standards, offering expanded features and higher usage limits.

The deal is the latest under GSA's "OneGov Strategy,"

launched in April to standardize technology procurement and

expand government use of AI. Other suppliers under the program

include OpenAI, Meta Platforms ( META ), Alphabet's

Google and Anthropic.

GSA has also approved Meta's Llama model for agency use

earlier this week, making it available to federal customers at

no cost.

(Reporting by Akash Sriram in Bengaluru; Editing by Anil

D'Silva)