DoD's $19.2M Palantir contract for core server licenses and hardware awarded via full and open competition

Contract Overview

Contract Amount: $19,243,057 ($19.2M)

Contractor: Palantir Technologies Inc.

Awarding Agency: Department of Defense

Start Date: 2012-09-28

End Date: 2013-09-27

Contract Duration: 364 days

Daily Burn Rate: $52.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PALANTIR CORE SERVER LICENSES AND HARDWARE

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $19.2 million to PALANTIR TECHNOLOGIES INC. for work described as: PALANTIR CORE SERVER LICENSES AND HARDWARE Key points: 1. Contract awarded for software licenses and hardware, indicating a need for data processing and analysis capabilities. 2. The contract was competed openly, suggesting a competitive environment for software and hardware providers. 3. A single award indicates Palantir was selected as the best value provider in this instance. 4. The contract duration of one year suggests a need for ongoing, but potentially project-specific, data infrastructure. 5. The firm-fixed-price structure aims to control costs for the government. 6. The North American Industry Classification System (NAICS) code 511210 points to the software publishing industry.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without more detailed cost breakdowns for licenses versus hardware. However, the total award of approximately $19.2 million over one year for specialized data analytics software and hardware suggests a significant investment. Compared to other large-scale software and hardware procurements, this amount falls within a moderate range, but its effectiveness hinges on the specific capabilities Palantir's platform provides to the Department of the Army and its operational impact. Further analysis would require understanding the unit costs of licenses and hardware components relative to market offerings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The fact that there was only one award suggests that Palantir Technologies Inc. was the chosen vendor, likely based on meeting all requirements and offering the best value proposition. The level of competition is not explicitly detailed beyond 'full and open,' so the number of actual bidders is unknown. This procurement method is generally favored for ensuring fair pricing and access to a wide range of potential solutions.

Taxpayer Impact: A full and open competition, even with a single awardee, generally benefits taxpayers by theoretically driving down prices through market forces and ensuring the government isn't locked into a non-competitive arrangement.

Public Impact

The Department of the Army is the primary beneficiary, gaining access to advanced data analytics capabilities. Services delivered include the provision of core server licenses and necessary hardware infrastructure. The contract is geographically focused on California, where the hardware and software will likely be deployed or managed. This contract supports the defense sector's increasing reliance on data-driven decision-making and intelligence gathering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detail on the number of bidders in the full and open competition limits understanding of true market pressure.
The specific performance metrics and expected outcomes for the Palantir system are not publicly detailed, making it hard to assess effectiveness.
The reliance on a single vendor for core server licenses and hardware could pose long-term dependency risks if not managed carefully.

Positive Signals

Awarded through full and open competition, indicating adherence to standard procurement practices.
The firm-fixed-price contract type provides cost certainty for the government.
The contract supports critical defense intelligence and data analysis needs.

Sector Analysis

This contract falls within the Software Publishers (NAICS 511210) sector, a segment of the broader IT industry focused on developing and distributing software. The market for data analytics and big data platforms is highly competitive, with numerous players offering solutions ranging from cloud-based services to on-premise hardware and software. Spending in this area within the federal government has been substantial as agencies seek to leverage data for improved decision-making, operational efficiency, and national security. Comparable spending benchmarks would involve analyzing other large software license and hardware procurements for similar analytical capabilities across defense and intelligence agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Palantir Technologies Inc. is a large business. There is no explicit information regarding subcontracting plans for small businesses within this specific award notice. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though Palantir may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract structure, requiring delivery of specified licenses and hardware. Transparency is facilitated by the contract award notice itself, which is publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Defense Intelligence Agency (DIA) IT procurements
National Geospatial-Intelligence Agency (NGA) software contracts
Army Command and Control Systems
Big Data Analytics Platforms for Federal Agencies
Department of Defense Software Licensing

Risk Flags

Vendor Lock-in Potential
Data Security Concerns
Performance Measurement Difficulty
High Cost of Specialized Software

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.2 million to PALANTIR TECHNOLOGIES INC.. PALANTIR CORE SERVER LICENSES AND HARDWARE

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 Army).

What is the total obligated amount?

The obligated amount is $19.2 million.

What is the period of performance?

Start: 2012-09-28. End: 2013-09-27.

What is Palantir Technologies Inc.'s track record with the Department of Defense and other federal agencies?

Palantir Technologies Inc. has a significant track record with the Department of Defense (DoD) and other federal agencies, particularly in providing data analytics and software platforms for intelligence, defense, and law enforcement purposes. Their work often involves integrating and analyzing vast datasets from disparate sources to support decision-making. Notable contracts have been with agencies like the Army, Air Force, Special Operations Command, and intelligence community components. Their platforms, such as Palantir Gotham and Palantir Foundry, are designed to handle complex data challenges. However, their work has also been subject to scrutiny regarding cost, transparency, and data privacy. The company has faced criticism and praise for its role in various government operations, highlighting its deep integration into the national security apparatus while also raising questions about its long-term implications and cost-effectiveness compared to alternative solutions.

How does the $19.2 million cost compare to similar data analytics software and hardware procurements?

Comparing the $19.2 million cost for Palantir's core server licenses and hardware requires context regarding the scope and duration of the contract. This award is for a one-year period. Large-scale enterprise software licenses, especially for advanced analytics platforms capable of handling classified or sensitive data, can range from hundreds of thousands to tens of millions of dollars annually, depending on user count, feature sets, and support levels. Hardware costs can add significantly to this. Without specific details on the number of licenses, hardware specifications, and the exact capabilities being procured, a direct cost-per-unit comparison is difficult. However, the amount is substantial and reflects the specialized nature of Palantir's offerings. It is crucial to benchmark this against other similar, large-scale data integration and analysis platforms procured by defense entities to ascertain if it represents good value for money, considering the unique capabilities and potential operational advantages it provides.

What are the primary risks associated with this contract for the Department of Defense?

The primary risks associated with this contract include vendor lock-in, potential cost overruns if the scope expands or if follow-on contracts are needed, and data security vulnerabilities. Given Palantir's specialized platform, transitioning away from it could be complex and costly. The firm-fixed-price nature mitigates some cost overrun risks for this specific award, but future needs might require renegotiation. Ensuring robust cybersecurity measures for the deployed licenses and hardware is paramount, especially given the sensitive nature of defense data. Furthermore, the effectiveness and actual utility of the platform in achieving desired operational outcomes represent a performance risk; if the system does not deliver expected benefits, the significant investment may not yield adequate returns. Dependence on a single vendor for critical data infrastructure also poses a strategic risk.

How effective is Palantir's software in supporting military intelligence and operational decision-making?

Palantir's software is generally considered effective in supporting military intelligence and operational decision-making due to its ability to integrate and analyze vast, disparate datasets in near real-time. Its platforms are designed to identify patterns, connections, and anomalies that might be missed by human analysts or less sophisticated tools. This capability is crucial for intelligence gathering, threat assessment, and tactical planning. Numerous reports and case studies suggest that Palantir's systems have been instrumental in various military operations, aiding in everything from counter-terrorism efforts to logistical planning. However, the precise metrics of effectiveness are often classified or proprietary. While its technical capabilities are widely acknowledged, the ultimate effectiveness is contingent on proper implementation, user training, data quality, and the specific operational context in which it is deployed. Continuous evaluation and adaptation are necessary to maximize its utility.

What has been the historical spending trend for Palantir Technologies Inc. with the federal government?

Historical spending trends for Palantir Technologies Inc. with the federal government show a consistent and significant increase over the years, particularly within the Department of Defense and intelligence agencies. Starting with smaller contracts, Palantir has secured numerous multi-million dollar awards for its data analytics platforms and related services. This growth reflects the increasing reliance of federal agencies, especially those in national security, on advanced data integration and analysis capabilities to address complex threats and operational challenges. Spending has been concentrated in areas such as intelligence analysis, logistics, cybersecurity, and special operations support. While specific aggregate spending figures fluctuate annually based on awarded contracts, the overall trajectory indicates a deepening partnership and substantial financial commitment from the government towards Palantir's solutions, making it one of the significant technology providers within the federal landscape.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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, Small Business

Financial Breakdown

Contract Ceiling: $19,243,057

Exercised Options: $19,243,057

Current Obligation: $19,243,057

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F0086U

IDV Type: FSS

Timeline