Palantir Wins Protest Against Navy Over Contract Bid Request

  • Navy tells GAO it will re-examine its acquisition approach
  • Peter Thiel-backed startup continues procurement reform battle

Peter Thiel.

Photographer: David Paul Morris/Bloomberg

Palantir Technologies Inc. just won a swift battle against the U.S. Navy, but a long war with the Pentagon continues.

The data-analysis startup filed a federal protest March 10, claiming a Navy request for bids to design software unfairly barred Palantir and others with commercially available technology, according to a copy of the filing obtained by Bloomberg.

The Navy canceled the bid request and plans to "re-examine the procurement record and its acquisition approach," according to a letter the Navy sent Tuesday to the U.S. Government Accountability Office, a copy of which was obtained by Bloomberg. The Navy wrote that it may issue a new solicitation later.

This isn’t Palantir’s first successful legal scuffle with the Pentagon. The Navy protest is "virtually identical" to a successful one it filed against the U.S. Army last year, said Palantir’s attorney Hamish Hume of Boies Schiller Flexner LLP.

Unlike the Navy, which capitulated in a matter of weeks, the Army fought Palantir through months of hearings before a judge affirmed the Federal Acquisitions Streamlining Act requiring government agencies to favor commercially available technology over custom built offerings. The Army is expected to appeal by April 13.

As the legal tussle drags on, calls for procurement reform grow.

"It’s a mess," said former U.S. Secretary of the Navy Ray Mabus, who recently joined Alphabet Inc.’s GV venture capital unit to advise startups on doing business with large organizations.

Reforming procurement has also been a hot topic for Palantir co-founder and chairman Peter Thiel. The polarizing billionaire has invested in Palantir with personal funds and through his venture and growth firms Founders fund and Mithril Capital Management.

Thiel, an adviser to President Donald Trump, has called for action against government waste while friends and former employees, including Justin Mikolay, Kevin Harrington and Michael Kratsios, have assumed positions in the Department of Defense, the National Security Council and White House.

"Right now we’re dealing with decisions made before the new administration took over," said Hume. "We’re hopeful that the new administration will take a new look."

Palantir could benefit significantly from a procurement policy overhaul. Roughly half its annual revenue still comes from government agencies, but it has yet to win a multi-year, multi-billion dollar contract like those won by longtime contractors like Northrop Grumman Corp. and Boeing Co.

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