Concerns Over AI Costs with $1 Deals
Former AI advisor Sid Ghatak recently raised some important questions about the $1-a-year deals offered by OpenAI and Anthropic to the federal government. He served as a director at the General Services Administration (GSA) from 2020 to 2024 and played a role in shaping President Biden’s executive order on AI in 2023.
In a discussion with Business Insider, Ghatak pointed out that while these deals sound attractive, the government should be aware of potential hidden costs when implementing AI. “What does $1 really mean?” he questioned. He emphasized that there could be extra costs involved in training AI models to fit specific needs.
Ghatak elaborated, “Once you’ve built the model, will the government need to pay for every time federal workers use it? Is there an additional fee for that?” His concerns highlight the complexities involved with such agreements.
He noted that OpenAI, Anthropic, and even Google have other types of partnerships with the government. For instance, the U.S. Department of Defense awarded OpenAI a contract worth $200 million in June to develop AI tools for national security.
After his time with the government, Ghatak founded a platform called Increase Alpha, which uses AI to predict stock prices. He underlined the importance of understanding all costs associated with these AI solutions.
“The government must realize that the expenses go beyond the initial $1 price. There’s a need for substantial investment in organizing data to make the AI work efficiently,” he said. Ghatak emphasized that quality data is essential for AI models to generate reliable results.
Last month, both OpenAI and Anthropic announced they would provide federal workers access to their AI models at a minimal fee of $1 per agency for a year.
In a related development, Google also announced it would offer its AI solutions to federal agencies through its Gemini for Government program, at a cost of $0.47 for a year in 2026.
Former GSA Chief Information Officer Casey Coleman stated that giving federal employees access to AI could enhance their work quality and creativity. “Automating processes and bridging gaps across organizations can help save time,” Coleman added, stressing the need for federal workers to focus more on serving the public rather than managing bureaucratic tasks.
