DoD Renews Palantir Software License for $35.8M, Raising Questions on Value and Competition

Contract Overview

Contract Amount: $35,804,181 ($35.8M)

Contractor: Palantir Technologies Inc.

Awarding Agency: Department of Defense

Start Date: 2014-09-26

End Date: 2016-09-26

Contract Duration: 731 days

Daily Burn Rate: $49.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PALANTIR SW LICENSE MAINTENANCE SUPPORT RENEWAL.

Place of Performance

Location: QUANTICO, PRINCE WILLIAM County, VIRGINIA, 22134

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $35.8 million to PALANTIR TECHNOLOGIES INC. for work described as: PALANTIR SW LICENSE MAINTENANCE SUPPORT RENEWAL. Key points: 1. Significant expenditure on a single vendor's software maintenance and support. 2. Limited competition indicated by the contract type and vendor. 3. Potential risk associated with vendor lock-in and high renewal costs. 4. IT sector spending on software licenses is substantial government-wide.

Value Assessment

Rating: questionable

The $35.8 million renewal for Palantir software maintenance and support appears high without clear comparative pricing. Benchmarking against similar enterprise software support contracts is difficult due to Palantir's unique offerings, but the cost warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Although listed as 'FULL AND OPEN COMPETITION', the award was made via a BPA Call to Palantir Technologies Inc. This suggests that while the initial BPA might have been competed, this specific call may not have involved robust price discovery against alternatives.

Taxpayer Impact: Taxpayers are funding a substantial renewal for software maintenance, with questions about whether the best possible price was achieved through competitive means.

Public Impact

Citizens may be concerned about the large sum spent on a single software vendor's ongoing support. Transparency regarding the justification for this renewal and the evaluation of alternatives is crucial for public trust. The long-term reliance on specific software platforms can impact government agility and cost-effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High renewal cost for software maintenance.
Lack of clear competitive pricing justification.
Potential vendor lock-in.

Positive Signals

Contract awarded to a known entity.
Established contract vehicle (BPA Call).

Sector Analysis

This contract falls within the Information Technology sector, specifically software licensing and support. Government spending on enterprise software, including data analytics platforms like Palantir's, is a significant and growing area, often characterized by high costs and complex procurement.

Small Business Impact

The contract was awarded to Palantir Technologies Inc., a large business. There is no indication that small businesses were involved in this specific renewal, which is common for specialized enterprise software contracts.

Oversight & Accountability

Oversight is needed to ensure the continued necessity and cost-effectiveness of this software renewal. Regular reviews of vendor performance and market alternatives should be conducted to mitigate risks associated with long-term sole-source-like arrangements.

Related Government Programs

Software Publishers
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

High dollar value renewal.
Potential for vendor lock-in.
Lack of demonstrated competitive pricing for this specific renewal.
Reliance on proprietary software.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.8 million to PALANTIR TECHNOLOGIES INC.. PALANTIR SW LICENSE MAINTENANCE SUPPORT RENEWAL.

Who is the contractor on this award?

The obligated recipient is PALANTIR TECHNOLOGIES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $35.8 million.

What is the period of performance?

Start: 2014-09-26. End: 2016-09-26.

What is the specific value proposition of Palantir's software maintenance and support that justifies this $35.8M renewal cost?

The value proposition likely centers on the continued functionality, updates, and technical assistance for Palantir's complex data integration and analysis platform. This includes ensuring the software remains operational, secure, and capable of supporting critical defense and intelligence missions. However, without detailed performance metrics and comparative cost-benefit analyses, the justification for the specific renewal amount remains opaque to external observers.

What are the risks associated with renewing this contract, particularly regarding vendor lock-in and future cost escalation?

The primary risk is vendor lock-in, where the government becomes heavily reliant on Palantir's proprietary technology, making it difficult and costly to switch to alternative solutions. This can lead to escalating costs over time as the vendor faces less competitive pressure. Furthermore, the specialized nature of the software may limit the pool of qualified personnel, increasing operational risks if support is disrupted.

How effective is the current procurement strategy in ensuring competitive pricing for essential software maintenance and support renewals?

The current strategy, utilizing a BPA Call under a previously competed BPA, appears to prioritize expediency over robust price discovery for this specific renewal. While the initial BPA may have been competitive, subsequent calls without re-competition or clear market research on alternatives may not yield the best value. This raises questions about the overall effectiveness in securing competitive pricing for ongoing software needs.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1530 PAGE MILL RD, PALO ALTO, CA, 94304

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

Financial Breakdown

Contract Ceiling: $35,804,181

Exercised Options: $35,804,181

Current Obligation: $35,804,181

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0010413AZF34

IDV Type: BPA

Timeline