The $1-a-year deals that OpenAI and Anthropic are dangling in front of the Trump administration may seem alluring, but the cost of rolling them out could be very high, says Sid Ghatak, a former advisor to the Biden administration on AI.
Ghatak told Business Insider in an interview last month that the government needs to consider the hidden costs of implementing AI.
“What does $1 really mean? Does that mean access to the open model and that compute will be charged incrementally?” he said, adding that the government might have to pay extra to train an AI model to meet their needs.
“So, there are all of those costs in terms of training, and then once you have built the model, does the government have to pay for inference whenever federal workers and contractors use it? Is there another incremental charge?” he added.
OpenAI and Anthropic did not respond to requests for comment from Business Insider.
It’s not just dollar deals. OpenAI has been partnering with the government in other areas. In June, the US Department of Defense said it had awarded OpenAI a $200 million contract to develop AI tools for national security applications.
Ghatak was a director at the General Services Administration from 2020 to 2024, overseeing the agency’s data and analytics. He contributed to President Joe Biden’s executive order on AI in October 2023 and co-authored the government’s AI Maturity Model, a framework that assesses AI products for adoption.
After leaving the government, Ghatak founded Increase Alpha, an AI-powered platform for predicting stock prices.
“The government has to be really careful and understand what the fully loaded cost is of these solutions beyond the very attractive zero to $1 charge,” he said.
The costs of using AI aren’t just limited to what gets paid to companies like OpenAI and Google, Ghatak said. The government will also need to make significant investments to consolidate its data for AI.
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“These AI models are powerful engines, but they require really fantastic data to run cleanly and produce reliable output. The investment in that is something that needs to be understood,” Ghatak said.
Last month, OpenAI and Anthropic said they were offering federal workers a year’s access to their AI models at a nominal cost of $1 per agency.
Google said in August that it was also offering its AI products to federal agencies under its Gemini for Government program. The search giant said agencies can pay $0.47 for a year’s access to Google’s AI tools in 2026.
A spokesperson for Google Public Sector said in a statement to Business Insider that the Gemini for Government program’s low price was meant “to remove cost as a barrier to innovation.”
“Our offer provides straightforward and predictable pricing, with no hidden fees and no complex licensing tiers, so agencies can budget with confidence,” the statement added.
Casey Coleman, the GSA’s chief information officer from 2007 to 2014, told Business Insider last month that giving federal workers access to AI will allow them to do “better, more creative, higher-value work.”
“So automating those processes, being able to connect the dots across organizations, will help give people their time back,” Coleman said.
“People go into public service to serve and to give back. They don’t go to manage bureaucratic workflows,” she added.
September 8, 11:25 p.m. — This story has been updated with a statement from Google Public Sector.
