DoD awards $195.7M contract for data platform to Palantir USG Inc. to support COVID-19 and joint operations

Contract Overview

Contract Amount: $195,724,056 ($195.7M)

Contractor: Palantir USG Inc

Awarding Agency: Department of Defense

Start Date: 2021-05-01

End Date: 2023-06-30

Contract Duration: 790 days

Daily Burn Rate: $247.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDES ACCESS TO AGILE, SCALABLE DATA PLATFORM WITH ROBUST DATA STREAMING,STORAGE TECHNOLOGIES, COMMERCIAL DATA PLATFORM WILL BE USED TO COORDINATE DECISIONS AND MANAGE RESOURCES FOR ON-GOING COVID PANDEMIC, AND FOR JOINT ALL-DOMAIN OPERATIONS.

Place of Performance

Location: PALO ALTO, SANTA CLARA County, CALIFORNIA, 94301

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $195.7 million to PALANTIR USG INC for work described as: PROVIDES ACCESS TO AGILE, SCALABLE DATA PLATFORM WITH ROBUST DATA STREAMING,STORAGE TECHNOLOGIES, COMMERCIAL DATA PLATFORM WILL BE USED TO COORDINATE DECISIONS AND MANAGE RESOURCES FOR ON-GOING COVID PANDEMIC, AND FOR JOINT ALL-DOMAIN OPERATIONS. Key points: 1. Contract aims to provide agile and scalable data platform for decision coordination and resource management. 2. Platform will support both ongoing COVID-19 pandemic response and future joint all-domain operations. 3. Significant investment in data infrastructure highlights DoD's focus on advanced operational capabilities. 4. Contract awarded as a definitive contract with a firm fixed price structure. 5. The duration of the contract is 790 days, indicating a medium-term project. 6. The awardee, Palantir USG Inc., is a known entity in the data analytics and software sector.

Value Assessment

Rating: fair

The contract value of $195.7 million for a 790-day period suggests a substantial investment in data platform capabilities. Benchmarking this against similar large-scale data infrastructure projects within the federal government is challenging without more granular details on the specific services and technologies provided. However, the firm fixed-price nature of the contract provides some cost certainty. The per-unit cost is difficult to ascertain due to the broad scope of services, but the overall investment is significant.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning it was not competed among multiple vendors. This approach can lead to higher costs and reduced innovation compared to a competitive process. The lack of competition means that the government did not benefit from a bidding war or a wide range of technical solutions being proposed. The justification for a sole-source award would typically involve unique capabilities or a critical need that only one vendor could meet.

Taxpayer Impact: Taxpayers may not be receiving the best value for their money due to the absence of competitive bidding. This could result in a higher overall cost for the data platform than if multiple vendors had vied for the contract.

Public Impact

The Department of Defense benefits from enhanced decision-making and resource management capabilities. The platform supports critical national security objectives, including pandemic response and joint all-domain operations. Personnel involved in COVID-19 response and military operations will have access to improved data tools. The contract's impact is national, focusing on strategic defense and public health initiatives.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs and suboptimal technological solutions.
Sole-source awards can limit transparency and accountability in government spending.
The broad scope of 'data platform' could lead to scope creep and cost overruns if not managed tightly.

Positive Signals

Palantir USG Inc. has a track record in providing complex data solutions to government agencies.
The firm fixed-price contract provides cost certainty for the duration of the award.
The contract addresses critical needs for both public health and national security operations.

Sector Analysis

The federal IT services market, particularly for data analytics and platform solutions, is substantial and growing. This contract falls within the 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services' NAICS code (518210). The Department of Defense is a major consumer of such services, investing heavily in advanced technologies to maintain a strategic advantage. Comparable spending benchmarks would involve other large-scale data modernization or platform development contracts within DoD or other federal agencies, often involving significant dollar values and multi-year durations.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. The award to a single, likely large, prime contractor suggests that the primary focus is on acquiring specialized capabilities rather than fostering small business participation through this specific vehicle. Further analysis would be needed to determine if any subcontracting plans exist that would benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The firm fixed-price nature provides some level of cost control. Transparency may be limited due to the sole-source award. Accountability will be measured by the successful delivery and performance of the data platform against its stated objectives. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

DoD Data Strategy
Joint All-Domain Command and Control (JADC2)
COVID-19 Response Initiatives
Cloud Computing Services
Big Data Analytics Platforms

Risk Flags

Sole-source procurement raises concerns about competition and potential cost overruns.
Lack of detailed scope definition in the provided data could indicate potential for scope creep.
The broad application (COVID-19 and joint operations) might stretch resources or dilute focus if not managed carefully.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $195.7 million to PALANTIR USG INC. PROVIDES ACCESS TO AGILE, SCALABLE DATA PLATFORM WITH ROBUST DATA STREAMING,STORAGE TECHNOLOGIES, COMMERCIAL DATA PLATFORM WILL BE USED TO COORDINATE DECISIONS AND MANAGE RESOURCES FOR ON-GOING COVID PANDEMIC, AND FOR JOINT ALL-DOMAIN OPERATIONS.

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 $195.7 million.

What is the period of performance?

Start: 2021-05-01. End: 2023-06-30.

What is Palantir USG Inc.'s track record with similar large-scale federal data platform contracts?

Palantir USG Inc. has a significant track record of securing and executing large federal contracts, particularly within the Department of Defense and intelligence communities. They are known for their sophisticated data integration, analysis, and visualization platforms, such as Palantir Gotham and Palantir Foundry. Past contracts have involved providing advanced data capabilities for various operational, intelligence, and logistical purposes. For example, they have been awarded contracts for data analytics supporting military operations, supply chain management, and intelligence analysis. Their experience often involves handling sensitive and complex datasets, requiring robust security and interoperability. The scale and nature of this $195.7 million award align with their established capabilities and past federal engagements, suggesting a degree of familiarity and proven performance in delivering such solutions.

How does the $195.7 million contract value compare to similar federal data platform procurements?

The $195.7 million contract value for a 790-day period (approximately 2.16 years) represents a substantial investment in a data platform. To benchmark this, one would look at other large federal IT procurements, especially those focused on enterprise data solutions, cloud infrastructure, or advanced analytics for agencies like the DoD, DHS, or HHS. For instance, other agencies have awarded multi-year contracts in the hundreds of millions or even billions for enterprise-wide data modernization or cloud migration efforts. While this specific contract's value is significant, its relative cost-effectiveness depends heavily on the scope, complexity, and specific technologies deployed. Without detailed statements of work and performance metrics for comparable contracts, a precise value-for-money assessment is difficult. However, the amount indicates a critical need and a high-priority project for the Department of Defense.

What are the primary risks associated with this sole-source data platform contract?

The primary risks associated with this sole-source contract stem from the lack of competition. Firstly, there's a significant risk of paying a premium price, as Palantir USG Inc. did not face competitive pressure to offer the lowest possible cost. Secondly, the government may not be receiving the most innovative or best-suited technological solution available on the market, as alternative vendors were not considered. Thirdly, sole-source awards can sometimes indicate a lack of adequate market research or planning by the agency. Finally, there's a potential risk of vendor lock-in, making it difficult and costly to switch providers in the future if performance issues arise or better alternatives emerge. Effective contract management and performance monitoring are crucial to mitigate these risks.

How effective is a firm fixed-price contract for a complex data platform project like this?

A firm fixed-price (FFP) contract is generally preferred by the government for its cost certainty, as it shifts most of the risk to the contractor. For a complex data platform project, an FFP contract can be effective if the scope of work is well-defined and unlikely to change significantly. It incentivizes the contractor to manage costs efficiently to maximize profit. However, if the project involves significant unknowns, evolving requirements, or cutting-edge technology where the scope is inherently difficult to define upfront, an FFP contract can become problematic. In such cases, contractors may build in substantial contingencies, leading to a higher initial price, or scope creep can lead to disputes and change orders. For this DoD contract, the success of the FFP structure will depend on how precisely the 'agile, scalable data platform' requirements were articulated and whether the contractor can deliver within the fixed price without compromising quality or essential features.

What are the historical spending patterns for data platform solutions within the Department of Defense?

The Department of Defense has consistently been one of the largest federal spenders on IT and data-related services, including data platforms. Historical spending patterns show a significant and increasing investment in modernizing data infrastructure, cloud computing, and advanced analytics capabilities to support its mission. This includes large-scale enterprise data initiatives, data warehousing, data lakes, and specialized analytical tools. Spending has been driven by the need to integrate vast amounts of data from diverse sources (e.g., sensors, intelligence, logistics) to enable better decision-making, particularly in complex operational environments like joint all-domain operations. Contracts for such capabilities often run into hundreds of millions or billions of dollars over several years, reflecting the scale and criticality of these systems. The trend is towards more agile, scalable, and cloud-native solutions, moving away from legacy systems.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $195,724,056

Exercised Options: $195,724,056

Current Obligation: $195,724,056

Actual Outlays: $6,400,000

Contract Characteristics

Commercial Item: PRODUCTS OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: NO

Timeline