Pentagon places big bets on frontier AI, quantum sensing and next-gen avionics in nearly $3 billion in defense technology contracts 

The U.S. Department of Defense has directed more than $700 million toward a suite of high-priority research and development initiatives on June 16, 2025. The announcement, posted on the DoD website, signals a push into frontier AI, quantum sensing and advanced battlespace simulation. Headlining the investments were a landmark prototype agreement with OpenAI and significant funding for developing next-generation sensory and simulation capabilities.

OpenAI gets $200M military AI contract

The Chief Digital and Artificial Intelligence Office (CDAO) awarded a $200 million prototype other transaction agreement to OpenAI Public Sector LLC to “develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains,” according to a DoD announcement. We also recently covered the news.

This marks one of OpenAI’s largest military contracts to date following on the heels of its December partnership with defense-tech startup Anduril. A CDAO official told Breaking Defense that the work will go beyond current Large Language Model capabilities to “prototype agentic workflows.”

OpenAI’s own website describes the aim of using “frontier AI” for a host of administrative applications, including “improving how service members and their families get health care, to streamlining how they look at program and acquisition data, to supporting proactive cyber defense.”

The contract, with work primarily in the Washington, D.C. area through July 2026, allocated $1,999,998 in immediate fiscal 2025 RDT&E funds. The development comes after Microsoft’s OpenAI-enabled Azure services received authorization for use at the highest security classification level in April.

Quantum sensing research targets next-gen detection capabilities

The Navy awarded Georgia Tech Applied Research Corp a $14,157,400 cost-plus-fixed-fee contract for quantum sensing and electromagnetic warfare R&D under the Office of Naval Research’s “Atomic Scepter” program. The 36-month effort, running through June 2028, will distribute work across multiple research centers including Charleston (41%), Washington D.C. (21%) and San Diego (11%).

This investment aligns with DARPA’s recently launched Robust Quantum Sensors (RoQS) program, which seeks to develop quantum sensors “inherently resistant to environmental disruptions” for deployment on military platforms. According to NATO’s assessment of quantum technologies, quantum sensors offer “much more accurate and sensitive measurements” and could enable detection of “exactly what lies under our feet through underground mapping.” The sensing could “provide early-warning systems for volcanic eruptions; enable autonomous systems to ‘see’ around corners; and provide portable scanners that monitor a person’s brain activity ”

The Congressional Research Service notes that quantum sensing is “the most mature military application of quantum technologies and is currently poised ‘for mission use.’” Potential applications include GPS-denied navigation and submarine detection.

Battlespace simulation contract advances multi-domain training

American Electronic Warfare Associates Inc. (AMEWAS) secured a $466,653,786 contract for advanced aircraft research, development, test and evaluation (AARDT&E). The five-year indefinite-delivery/indefinite-quantity contract covers “research, development, management, design, documentation, fabrication, installation, integration, test, evaluation, operation and maintenance in support of integrated battlespace simulation,” according to the DoD announcement.

The work supports the Naval Air Warfare Center Aircraft Division’s Integrated Battlespace Simulation and Test Department, which serves as a center of excellence for NAVAIR and acts as a point-of-entry for modeling and simulation of fleet battlespace environments that support the research, development, test, evaluation and training of aviation systems.

AMEWAS will perform work at both government and contractor sites, continuing its long-standing role in developing warfare scenarios, battlespace entity models and behaviors, and distributed simulation capabilities for the Navy. The contract includes development and maintenance of battlespace simulation tools, application of these tools to specific customer requirements, and operation and maintenance support for delivered battlespace products.