Meta-backed Scale AI is taking the Department of Defense to court. Some docs are expected to be classified.
· Business Insider
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- Scale AI is suing the Department of Defense, filing its complaint on January 30.
- The nature of the dispute is unclear, and case documents are expected to include classified information.
- Scale AI is best known for its data labeling work with Big Tech companies like Meta and Google.
Meta-backed artificial intelligence training company Scale AI is suing the Department of Defense.
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The nature of the dispute, including what Scale is seeking, is unclear. Most of the documents, including the complaint, were filed on January 30 and are sealed. The lawsuit has not previously been reported.
Case documents are expected to include classified information at the "secret/no foreign" level, according to one of the few unsealed documents.
The US is the only named defendant. Another AI company, Enabled Intelligence, joined as an intervenor defendant — a third party that voluntarily joins a suit to protect their interests.
In the fall, Scale lost a bid for a contract worth up to $708 million from the National Geospatial-Intelligence Agency, part of the DoD, to Enabled Intelligence. The contract, which could last up to seven years, was the agency's largest data-training agreement yet. It includes work with the Pentagon's signature AI effort, Maven.
In late December, Scale filed a bid protest with the Government Accountability Office against the National Geospatial-Intelligence Agency. Scale's bid protest was dismissed in late January, two days before the company sued in the Court of Federal Claims. The GAO does not typically publish information on routine protest dismissals.
In 2024, Scale won a $24 million, one-year contract from the National Geospatial-Intelligence Agency to work on data labeling for Maven.
A Scale spokesperson declined to comment on the DoD lawsuit, saying it "relates to a recent procurement decision."
"Scale AI stands firmly with Secretary Hegseth and the Department of War in their mission to get frontier AI capabilities into the hands of warfighters. We are committed to ensuring the procurement process reflects the high standards required for our nation's most critical AI initiatives," the spokesperson said.
Attorneys for Enabled Intelligence and the DoD did not respond to requests for comment from Business Insider.
Scale's work with the DoD
Scale has signed several multimillion-dollar contracts with the DoD since 2020. In March, the startup announced it was working with defense tech startup Anduril and Microsoft to deploy AI agents in the US military under a DoD program called "Thunderforge." In August, Scale announced a $99 million contract to develop AI tools for the Army.
The company is best known for its data labeling business, which has helped Big Tech clients like Google and Meta improve their AI chatbots. In June, Scale received a $14.3 billion investment from Meta in exchange for a 49% stake in the startup.
Scale's former CEO, Alexandr Wang, wrote an open letter to President Donald Trump after his second inauguration, outlining five ways the president could advance AI in his first 100 days. The then-Scale exec wrote that he wanted the US government to emulate tech giants by spending more on data and compute and noted Scale's work with the DoD. Wang, who left Scale to join Meta's Superintelligence Labs as chief AI officer, also attended the president's AI dinner at the White House in September.
Since Meta's investment, Scale has laid off 200 employees, or 14% of its workforce, lost major clients including Google and xAI, and has been battling a swarm of newer entrants trying to poach its clients and workers.
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