Treasury's IRS awards $13.3M for COTS software and cloud services to Palantir Technologies Inc

Contract Overview

Contract Amount: $13,325,955 ($13.3M)

Contractor: Palantir Technologies Inc.

Awarding Agency: Department of the Treasury

Start Date: 2025-09-24

End Date: 2026-09-23

Contract Duration: 364 days

Daily Burn Rate: $36.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IT SERVICES. COMMERCIAL OFF THE SHELF (COTS) SOFTWARE LICENSING, CLOUD SERVICES, TO ENABLE COMPLIANCE HUB TO CREATE ANALYTIC MODELS.

Place of Performance

Location: DENVER, DENVER County, COLORADO, 80202

State: Colorado Government Spending

Plain-Language Summary

Department of the Treasury obligated $13.3 million to PALANTIR TECHNOLOGIES INC. for work described as: IT SERVICES. COMMERCIAL OFF THE SHELF (COTS) SOFTWARE LICENSING, CLOUD SERVICES, TO ENABLE COMPLIANCE HUB TO CREATE ANALYTIC MODELS. Key points: 1. Contract supports the creation of analytic models for the Compliance Hub. 2. Utilizes commercial off-the-shelf (COTS) software licensing and cloud services. 3. Awarded under a Blanket Purchase Agreement (BPA) Call. 4. Firm Fixed Price contract type suggests predictable costs. 5. Duration of one year with potential for renewal. 6. No small business set-aside indicated for this specific award.

Value Assessment

Rating: good

The contract value of $13.3 million for a one-year period for COTS software and cloud services appears reasonable given the specialized nature of Palantir's offerings. Benchmarking against similar government contracts for advanced analytics platforms and cloud infrastructure would provide a more precise value-for-money assessment. The firm fixed price structure helps mitigate cost overruns for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The specific competition dynamics for this BPA Call are not detailed, but the full and open nature suggests a competitive process that should drive price discovery and potentially favorable terms for the government.

Taxpayer Impact: A full and open competition process generally benefits taxpayers by ensuring that the government explores various solutions and pricing, leading to potentially lower costs and better service delivery.

Public Impact

Benefits the Internal Revenue Service (IRS) by enhancing its analytical capabilities. Services delivered include COTS software licensing and cloud services. Geographic impact is primarily within the IRS's operational scope. Workforce implications may involve training IRS personnel on new analytic tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with specialized software and cloud solutions.
Reliance on a single vendor for critical analytic infrastructure could pose risks.
Ensuring data security and privacy within the cloud environment is paramount.

Positive Signals

Leverages established COTS software and cloud services for efficiency.
Firm Fixed Price contract provides cost certainty.
Awarded through a competitive process, suggesting potential for good value.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on software licensing and cloud computing. The market for advanced analytics platforms and cloud services is robust and growing, with significant government spending in this area. Palantir is a known provider in this space, often competing for large-scale data analytics contracts across various federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses and there is no indication of subcontracting requirements for small businesses in this specific award. This means the primary contract value is not directly flowing to the small business sector through this particular BPA Call.

Oversight & Accountability

Oversight will likely be managed by the contracting officers and program managers within the IRS. Transparency is facilitated by the contract being awarded under full and open competition. Accountability measures are inherent in the firm fixed price contract type, requiring delivery of specified services. Inspector General jurisdiction would apply if any fraud or mismanagement is suspected.

Related Government Programs

IRS Data Analytics Modernization Programs
Federal Cloud Computing Strategy Initiatives
Commercial Off-The-Shelf Software Procurement
Palantir Technologies Government Contracts

Risk Flags

Potential for vendor lock-in
Data security and privacy concerns
Reliance on specialized COTS software

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $13.3 million to PALANTIR TECHNOLOGIES INC.. IT SERVICES. COMMERCIAL OFF THE SHELF (COTS) SOFTWARE LICENSING, CLOUD SERVICES, TO ENABLE COMPLIANCE HUB TO CREATE ANALYTIC MODELS.

Who is the contractor on this award?

The obligated recipient is PALANTIR TECHNOLOGIES INC..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $13.3 million.

What is the period of performance?

Start: 2025-09-24. End: 2026-09-23.

What is the track record of Palantir Technologies Inc. with the IRS and other federal agencies for similar IT services?

Palantir Technologies Inc. has a significant track record with various federal agencies, including the Department of Defense and intelligence agencies, for providing advanced data analytics platforms and software. Their work often involves integrating and analyzing large, complex datasets. While specific contract details with the IRS for this exact type of service may vary, Palantir's broader federal experience suggests a capability to deliver on complex IT requirements. Past performance reviews and contract awards from other agencies can offer insights into their reliability, project execution, and ability to meet government specifications. It is important to review the specific terms and deliverables of this contract to ensure alignment with IRS needs and to assess Palantir's suitability based on their history.

How does the $13.3 million value compare to similar government contracts for COTS software licensing and cloud services?

The $13.3 million contract value for a one-year term for COTS software licensing and cloud services is within a typical range for specialized IT solutions provided by companies like Palantir. However, a precise comparison requires detailed knowledge of the specific software, cloud services, and the scope of analytic model development. Government-wide contract vehicles and databases like FPDS or SAM.gov can be consulted for benchmarks. Factors such as the number of users, data volume, required processing power, and the level of customization significantly influence pricing. Without these specifics, it's challenging to definitively state if this represents excellent or fair value, but it does not appear exceptionally high or low for the described services.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential vendor lock-in due to Palantir's proprietary software and platforms, which could make future transitions to different vendors difficult and costly. There's also a risk related to data security and privacy, given the sensitive nature of IRS data being processed in the cloud. Mitigation strategies likely involve robust contract language defining data ownership and security protocols, adherence to federal data protection standards (e.g., FISMA), and potentially phased implementation to allow for ongoing assessment. The firm fixed price nature mitigates financial risk for the government, but performance risk remains if the vendor fails to deliver the required analytic capabilities.

How effective is the use of COTS software and cloud services for creating advanced analytic models within a government context like the IRS?

The use of COTS software and cloud services for advanced analytics is generally effective for government agencies like the IRS, offering scalability, flexibility, and access to cutting-edge technology without the burden of extensive in-house development. COTS solutions provide pre-built functionalities that can accelerate model development. Cloud services offer on-demand computing power and storage, crucial for handling large datasets and complex computations. However, effectiveness hinges on proper integration, data governance, and ensuring the COTS solutions meet specific government requirements, including security and interoperability. Palantir's platform is designed for such complex data integration and analysis, suggesting a strong potential for effectiveness if implemented correctly.

What are the historical spending patterns of the IRS on data analytics and related IT services?

The IRS has historically invested significantly in IT modernization and data analytics to improve tax administration, combat fraud, and enhance taxpayer services. Spending patterns often reflect a shift towards cloud-based solutions and advanced analytics capabilities to process vast amounts of financial and taxpayer data. This includes procurements for software licenses, cloud infrastructure, data warehousing, and specialized analytical tools. The IRS's budget often allocates substantial funds to IT, with a growing portion dedicated to data analytics as agencies increasingly rely on data-driven insights. This $13.3 million award aligns with this trend of increased investment in advanced analytical capabilities.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1200 17TH STREET, DENVER, CO, 80202

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

Financial Breakdown

Contract Ceiling: $13,325,955

Exercised Options: $13,325,955

Current Obligation: $13,325,955

Actual Outlays: $13,325,955

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 2023H225A00002

IDV Type: BPA

Timeline