Palantir wins court battle, gets second chance at six-figure government contract

Big-data startup Palantir will get a second chance at a coveted government contract thanks to a judge’s ruling that the company was illegally excluded from the bidding process.

The $20 billion Palo Alto-based company cried foul earlier this year, claiming it was blocked from competing on a project to upgrade an Army data analysis system —  a contract that could be worth hundreds of millions of dollars. On Monday a judge in the U.S. Court of Federal Claims in Washington, D.C. handed Palantir a win, Bloomberg reported.

Judge Marian Blank Horn said that by failing to consider Palantir’s software, the Army broke a law that requires government agencies to save money by using commercial products when they are available. “You have to follow the dictates of the statute,” she said, according to Bloomberg. “The statute is not meaningless.”

The ruling is a major win for Palantir, billionaire investor Peter Thiel‘s company, which sells a data analysis platform used by government agencies such as the FBI and CIA to track down criminals and uncover security threats. The decision comes as the U.S. government is trying to work more closely with Silicon Valley tech startups — Secretary of Defense Ash Carter has spearheaded those efforts with his DIUx program — but private companies like Palantir and SpaceX still have had to sue government agencies to win their business.

The Palantir controversy started over the Army’s Distributed Common Ground System, which was supposed to be a data platform that allows soldiers to gather and analyze intelligence data from multiple sources. The Army had spent $6 billion and 15 years working on its own software for the program, according to Palantir’s complaint, but those efforts largely failed, and the Army wanted to start over.

Palantir tried to convince the Army to use its Gotham software for the task, but the startup says the Army never gave it a chance — instead insisting on continuing its own internal software development efforts. That made no sense, Palantir argued, when a viable software solution was sitting under the government’s nose.

“Yet the Army refuses even to consider the procurement of that technology,” Palantir’s lawyers wrote in the startup’s complaint, filed in June. “Instead, it plans to double down on its failed developmental effort. This court should put a stop to that irrational, unlawful, and self-defeating conduct.”

The startup argued there was definitely a “bias and animosity towards Palantir” in the bidding process, according to another document filed with the court. Palantir claimed the Army repeatedly blocked Palantir from conducting evaluations that would have proven its software’s capabilities, and that the program’s leaders circulated false information about Palantir to the Army and Congress.

The judge’s ruling doesn’t guarantee that Palantir will win the contract, but it does force the Army to give the startup a second chance.

Photo: People line up to have their identities verified before entering the Palantir cafeteria in Palo Alto, Calif., April 23, 2016. (Karl Mondon/Bay Area News Group)

 

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