DoD Awards Palantir $130M for Commercial Data Platform, Raising Competition Concerns

Contract Overview

Contract Amount: $130,042,463 ($130.0M)

Contractor: Palantir USG Inc

Awarding Agency: Department of Defense

Start Date: 2023-06-16

End Date: 2025-06-15

Contract Duration: 730 days

Daily Burn Rate: $178.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ESTABLISH BASIC LETTER CONTRACT FOR COMMERCIAL DATA AS A SERVE PLATFORM.

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $130.0 million to PALANTIR USG INC for work described as: ESTABLISH BASIC LETTER CONTRACT FOR COMMERCIAL DATA AS A SERVE PLATFORM. Key points: 1. Significant contract value awarded to a single vendor. 2. Lack of competition raises questions about price discovery. 3. Potential for vendor lock-in with a sole-source award. 4. Focus on data services aligns with growing IT sector needs.

Value Assessment

Rating: questionable

The contract value of $130M for a data-as-a-service platform is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar commercial offerings or potential government-developed solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were solicited. This significantly limits price discovery and may not result in the most cost-effective solution for the government.

Taxpayer Impact: The lack of competition could lead to higher costs for taxpayers than if multiple vendors had vied for the contract.

Public Impact

Taxpayers may be paying a premium due to the absence of competitive bidding. The Air Force is relying on a single vendor for a critical data platform. Future contract renewals could continue without competition, impacting long-term costs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Potential for high cost

Positive Signals

Addresses critical data needs
Utilizes commercial off-the-shelf technology

Sector Analysis

The Department of Defense's investment in a commercial data-as-a-service platform falls within the broader IT sector, specifically software publishing. Spending in this area is rapidly increasing as agencies seek to leverage data for decision-making.

Small Business Impact

This contract was awarded directly to Palantir USG Inc. and does not indicate any specific provisions or set-asides for small businesses. The sole-source nature likely precluded small business participation.

Oversight & Accountability

The sole-source justification for this contract warrants close oversight to ensure the government is receiving adequate value and that future competition is considered where feasible. Transparency in contract modifications and performance will be key.

Related Government Programs

Software Publishers
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated costs due to lack of bidding.
Risk of vendor lock-in.
Limited transparency on pricing justification.
No clear small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $130.0 million to PALANTIR USG INC. ESTABLISH BASIC LETTER CONTRACT FOR COMMERCIAL DATA AS A SERVE PLATFORM.

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 $130.0 million.

What is the period of performance?

Start: 2023-06-16. End: 2025-06-15.

What is the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The provided data indicates a sole-source award, suggesting a specific justification was likely cited, such as unique capabilities or urgency. However, without further documentation, it's unclear if alternative competitive strategies were thoroughly explored or deemed impractical. A review of the justification is crucial to understand the rationale and assess if it adequately supports bypassing full and open competition.

How does the $130M contract price compare to similar commercial data-as-a-service offerings, and what mechanisms are in place to ensure cost-effectiveness over the contract's duration?

Benchmarking this $130M contract against similar commercial offerings is challenging without access to detailed service level agreements and pricing structures. The lack of competition limits the government's leverage in price negotiation. Mechanisms for ensuring cost-effectiveness might include performance metrics tied to cost savings or efficiency gains, but these would need to be rigorously monitored.

What are the potential risks associated with relying on a single vendor for a critical data platform, particularly concerning data security, vendor lock-in, and future innovation?

Relying on a single vendor like Palantir for a critical data platform introduces risks of vendor lock-in, making it difficult and costly to switch providers later. Data security is paramount, and dependence on one entity requires stringent oversight. Furthermore, a sole-source arrangement might stifle innovation if the vendor's roadmap doesn't align with evolving government needs or if alternative, more advanced solutions emerge elsewhere.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: 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: $130,042,463

Exercised Options: $130,042,463

Current Obligation: $130,042,463

Contract Characteristics

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

Cost or Pricing Data: NO

Timeline