Palantir chosen again, BAE also selected for next phase of Army intell system upgrade

Silicon Valley’s Palantir Technologies is continuing to throw its weight around in the government market with another large win in tow to make the software maker’s presence more known.

Palantir and BAE Systems’ U.S. subsidiary will share in a seven-year, $823 million contract to update and replace components in the Army’s main battlefield intelligence system, the Defense Department said in its Tuesday awards digest.

Six total bids were submitted for the Distributed Common Ground System-Army program’s second phase known as “Capability Drop 2: Data Fabric and Analytics.” Palantir and BAE Systems Inc. will compete for task orders to build a strategic data platform for the system.

The goal of Capability Drop 2 focuses on helping the system dynamically take in live data from more than one source at a time, then lay it out against different models to operate with open interfaces.

This gives Palantir two out of two wins so far for this current iteration of the broader DCGS-A effort. After a long court battle, the Army chose Palantir and longtime DCGS-A incumbent Raytheon nearly two years ago to battle for task orders as part of the recompete’s first phase known as Capability Drop 1.

Palantir sued for the right to at least bid for some work and provide its commercial software to the Army. That was a sticking point for the company in its legal fight after the Army originally chose the custom software development approach.

No sales can be booked quite yet for Capability Drop 2 as disappointed bidders could still protest. But this latest DCGS-A win serves more notice that Palantir’s approach is taking a foothold in a U.S. defense market it previously could not seem to gain one in. 

Intelligence community venture capital arm In-Q-Tel was an early investor in Palantir, which can make it somewhat difficult to call the company a non-traditional player in the government market.

But Palantir certainly has encroached on work that other government contractors have a longer history in. One telling example of this came in December when Palantir bested four other companies for a potential four-year, $440 million contract to build a human resources data dashboard for the Army.

Who were the other bidders for that? Reportedly Accenture, Deloitte, Ernst & Young and Microsoft.

The latest DCGS-A win for Palantir stands to push its government division revenue even further past the current roughly $500 million, according to a Bloomberg report.

Palantir CEO Alex Karp confirmed to CNBC in January the company’s widely-reported inventory of U.S. and international government contracts was around $1.5 billion at the time, adding that its business was “probably 50-50” commercial versus government.

An entry to the public markets continues to be widely reported and speculated upon: either through a traditional initial public offering or via direct listing.