Scale AI awarded $250M contract by Department of Defense

Scale AI, a tech startup that focuses on the data that powers artificial intelligence, has won a nearly $250 million blanket purchasing agreement that aims to give all federal agencies access to its tech.

The contract was issued by the Department of Defenses’s Joint Artificial Intelligence Center, an organization that the company describes itself as its “AI readiness partner.” The company said it will develop a range of test and evaluation AI products that will focus on image analysis, autonomy, natural language processing and interfaces like augmented reality. It’s the startup’s largest federal contract to date.

“AI is not a one-and-done technology, and we’re thrilled to see the JAIC embrace the continuous approach to T&E that Scale was founded on,” Scale’s founder and CEO Alex Wang said in a statement.

The company lists the U.S. Army and Air Force as customers on its website and information from the Federal Procurement Data System shows it has won several smaller contracts with military departments. This appears to be the company’s first contract of this size with the military.

In an interview, Wang said this is the culmination of “years” of work discussing data tools with the JAIC. Wang hopes it will spur more large, production-sized contracts for Scale AI, which he believes has crossed the so-called “valley of death” — a metaphor for the funding gap between when startups receive small prototype contracts and their ability to maintain business while waiting for larger production contracts.

“I do think it is a real problem for most companies, but I think Scale is very lucky where even early on we have been able to achieve meaningful business and production business with the DOD,” Wang said. “I think our federal government business is already viable.”

Scale AI has hired several major former DOD and government officials as it aims to break into the defense space. In May, it hired Michael Kratsios, former White House chief technology officer and acting DOD undersecretary for research and engineering, to be its managing director. Its government relations team also has picked up key former staff members of the House Armed Services Committee, according to LinkedIn.

The company says the tools it will provide to federal agencies aim to improve the full life cycle of data management, a key part of building AI models. And with this latest contact, Wang said the company will continue to invest more in its federal technology. “The AI problems that the government has are some of the most interesting and complex and frankly some of the most impactful,” he said