Palantir awarded $39.5M contract for management consulting services to the Air Force

Contract Overview

Contract Amount: $39,522,690 ($39.5M)

Contractor: Palantir USG Inc

Awarding Agency: Department of Defense

Start Date: 2025-07-07

End Date: 2026-01-24

Contract Duration: 201 days

Daily Burn Rate: $196.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROJECT HYDRANT

Place of Performance

Location: CAMP H M SMITH, HONOLULU County, HAWAII, 96861

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $39.5 million to PALANTIR USG INC for work described as: PROJECT HYDRANT Key points: 1. Contract value of $39.5M for approximately 7 months of service. 2. Services fall under 'Other Management Consulting Services' category. 3. Awarded via 'Full and Open Competition After Exclusion of Sources', indicating a specific justification for limited competition. 4. Contract type is 'Definitive Contract' with a 'Firm Fixed Price' payment structure. 5. Performance period spans from July 2025 to January 2026. 6. Contractor is Palantir USG Inc., a known entity in data analytics and software. 7. The contract is not set aside for small businesses.

Value Assessment

Rating: fair

The contract value of $39.5M for a 7-month period suggests a significant investment in consulting services. Benchmarking this against similar contracts for 'Other Management Consulting Services' would be crucial to assess value for money. Without specific deliverables or performance metrics, it's difficult to definitively assess the efficiency of this pricing. The firm fixed price structure implies that the contractor bears the risk of cost overruns, which can be a positive indicator if the scope is well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources'. This solicitation method suggests that while the competition was intended to be open, specific circumstances led to the exclusion of certain sources or a limited pool of bidders. The exact reasons for this exclusion are not detailed in the provided data, making it difficult to assess the breadth of competition. A limited competition can sometimes lead to higher prices compared to full and open competition with multiple bidders.

Taxpayer Impact: Taxpayers may not have received the benefit of the lowest possible price due to the limited nature of the competition. The justification for excluding sources needs to be thoroughly reviewed to ensure fair market value was obtained.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving management consulting expertise. Services are expected to support Air Force operations and strategic initiatives. The geographic impact is likely concentrated within the Air Force's operational areas, potentially global. Workforce implications are indirect, focusing on enhancing Air Force decision-making and efficiency rather than direct employment creation by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential price inflation and reduced innovation.
The 'Exclusion of Sources' justification requires scrutiny to ensure it was appropriate and not arbitrary.
Lack of detailed performance metrics makes it hard to gauge the true value and impact of the consulting services.

Positive Signals

Firm Fixed Price contract structure shifts cost risk to the contractor.
Palantir USG Inc. is an established company with significant experience in government contracts.
The contract duration is clearly defined, providing a predictable timeframe for service delivery.

Sector Analysis

This contract falls within the Management Consulting Services sector, a broad category encompassing strategic planning, operational improvement, and advisory services. The market for government consulting is substantial, with numerous firms competing for federal contracts. This specific award to Palantir USG Inc. for the Department of the Air Force highlights the ongoing need for specialized data-driven insights and strategic guidance within defense agencies. Comparable spending benchmarks would typically involve analyzing the average cost of similar consulting engagements across different branches of the military or other federal agencies.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'sb': false. Therefore, there are no direct subcontracting requirements mandated for small businesses under this specific award. The impact on the small business ecosystem is minimal in terms of direct set-aside opportunities. However, Palantir, as a large prime contractor, may engage small businesses as subcontractors if their services align with the project's needs, though this is not a contractual obligation here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Department of the Air Force. Accountability measures are embedded in the firm fixed price structure, requiring the contractor to deliver defined services within the agreed budget. Transparency is generally facilitated through contract databases like FPDS, where award details are published. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Management and Financial Consulting, Acquisition and Commercialization Services
Information Technology Professional Services
Defense-Wide Contract Operations and Support Services

Risk Flags

Limited competition justification requires review.
Potential for cost overruns if scope is not tightly managed.
Lack of detailed performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.5 million to PALANTIR USG INC. PROJECT HYDRANT

Who is the contractor on this award?

The obligated recipient is PALANTIR USG INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $39.5 million.

What is the period of performance?

Start: 2025-07-07. End: 2026-01-24.

What specific management consulting services will Palantir USG Inc. provide under this contract?

The provided data indicates the contract is for 'Other Management Consulting Services' (NAICS code 541618). While the specific deliverables are not detailed, this category typically includes services such as strategic planning, organizational analysis, process improvement, program management support, and advisory services related to operational efficiency and effectiveness. Given Palantir's known expertise, these services likely involve leveraging data analytics and software solutions to enhance decision-making, optimize resource allocation, or improve the performance of Air Force programs and operations. A deeper dive into the contract's Statement of Work (SOW) would be necessary to ascertain the precise nature of the consulting activities.

How does the $39.5M contract value compare to similar Air Force consulting contracts?

To benchmark the $39.5M contract value, one would need to compare it against historical awards for 'Other Management Consulting Services' (NAICS 541618) issued by the Department of the Air Force or similar defense agencies over a comparable period (e.g., 6-7 months). Factors such as the scope of work, contractor experience, and specific deliverables significantly influence pricing. Without access to a detailed database of comparable contracts with granular service descriptions and pricing, a precise comparison is challenging. However, $39.5M for approximately seven months of specialized consulting suggests a high-value engagement, potentially involving complex data analysis or strategic advisory for critical Air Force initiatives.

What are the potential risks associated with a 'Full and Open Competition After Exclusion of Sources' award?

This award type, 'Full and Open Competition After Exclusion of Sources', presents specific risks. While it aims for broad competition initially, the subsequent exclusion of sources implies that only a limited number of bidders ultimately participated or were considered. This can lead to reduced price competition, potentially resulting in higher costs for the government compared to a scenario with numerous active bidders. There's also a risk that the most innovative or cost-effective solutions might have been overlooked if the excluded sources offered superior alternatives. Transparency regarding the justification for excluding sources is critical to mitigate the risk of perceived unfairness or favoritism.

What is Palantir USG Inc.'s track record with the Department of Defense?

Palantir USG Inc. has a significant and well-documented track record with the Department of Defense (DoD) and other federal agencies. They are known for providing advanced data analytics platforms and software solutions, often used for intelligence analysis, logistics, and operational planning. Their contracts with the DoD have historically been substantial, covering a range of applications from battlefield intelligence to supply chain management. While this specific contract is for management consulting, Palantir's extensive experience in handling sensitive data and supporting complex defense operations suggests a strong familiarity with the DoD's environment and requirements.

What are the implications of the 'Firm Fixed Price' contract type for this project?

The 'Firm Fixed Price' (FFP) contract type means that the total price of the contract is fixed and not subject to adjustment based on the contractor's cost experience. This places the primary risk of cost overruns on Palantir USG Inc. For the Air Force, this offers budget certainty and predictability, as the final cost is known upfront, assuming the scope of work is well-defined and does not change significantly. This structure incentivizes the contractor to manage its costs efficiently and deliver the agreed-upon services within the fixed price. However, if the scope is poorly defined or unforeseen issues arise, the contractor might be less willing to go above and beyond, potentially impacting the depth of service.

How does the contract's duration of 201 days impact the assessment of its value?

The contract duration of 201 days (approximately 6.6 months) is relatively short for a significant consulting engagement, especially one valued at $39.5 million. This short timeframe suggests that the services required are likely focused, intensive, and aimed at achieving specific, short-term objectives rather than long-term strategic transformation. The high daily rate implied by the contract value ($39.5M / 201 days ≈ $196,617 per day) underscores the specialized nature of the expertise being procured. Assessing the value requires understanding if these intensive, short-term objectives are critical and achievable within this timeframe, and if the cost is justified by the expected outcomes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Other Management Consulting Services

Product/Service Code: IT AND TELECOM - COMPUTE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: ALTERNATIVE SOURCES

Solicitation ID: FA714621SC001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Palantir Technologies Inc.

Address: 635 WAVERLEY ST, PALO ALTO, CA, 94301

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,522,690

Exercised Options: $39,522,690

Current Obligation: $39,522,690

Contract Characteristics

Commercial Item: DOD - SECTION 803 CSO PROCEDURES

Cost or Pricing Data: NO

Timeline