Knowing the DoD, I bet it's not. I bet they just want their own secure servers or some sort of corporate data/encryption management, and they're willing to pay out the nose to not have to use asksage or some terrible DoD friendly clone
“National security challenges” is incredibly broad, providing the right size of boots to USCG rescue swimmers could be considered a national security challenge.
“Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains,” the Defense Department said.