Meta-backed artificial intelligence training company Scale AI is suing the Department of Defense.
The nature of the dispute, including what Scale is seeking, is unclear. Most of the documents containing the complaint were filed on January 30 and are sealed. The lawsuit had not previously been reported.
According to one of the few unsealed documents, the case documents are expected to contain sensitive information at the level of “classified/restricted to foreigners.”
The United States is the only country named as a defendant. Another AI company, Enabled Intelligence, joined as an intervenor defendant (a third party who voluntarily joins the litigation to protect its 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 Department of Defense, to Enabled Intelligence. The contract could last up to seven years and is the agency’s largest data training contract to date. This includes work with Maven, the Department of Defense’s flagship AI effort.
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 filed its lawsuit in the Court of Federal Claims. GAO generally does not publicly disclose information about dismissals due to periodic protests.
In 2024, Scale was awarded a $24 million, one-year contract by the National Geospatial-Intelligence Agency to work on data labeling for Maven.
A spokesperson for Scale declined to comment on the Pentagon lawsuit, saying it was “related to recent procurement decisions.”
“Scale AI will work closely with Secretary Hegseth and the Department of the Army in their mission to bring frontline AI capabilities into the hands of warfighters. We are committed to ensuring our acquisition processes reflect the high standards required for our nation’s most important AI initiatives,” the spokesperson said.
Lawyers for Enabled Intelligence and the Department of Defense did not respond to requests for comment from Business Insider.
Scale and Department of Defense collaboration
Scale has received multiple multi-million dollar contracts with the Department of Defense since 2020. In March, the company announced it would work with defense technology startup Anduril and Microsoft to deploy AI agents to the U.S. military under a Department of Defense 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 companies 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.
Former Scale CEO Alexander Wang wrote an open letter to President Donald Trump after his second term in office, outlining five ways the president could advance AI in his first 100 days. Scale executives wrote at the time that they wanted the U.S. government to follow the tech giants’ example by spending more on data and computing, citing Scale’s work with the Department of Defense. Wang, who left Scale to join Meta’s Superintelligence Institute 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 customers like Google and xAI, and continues to battle a swarm of new entrants looking to poach customers and employees.
