Army consolidates dozens of Palantir software contracts into one deal worth up to $10 billion

WASHINGTON — The Army announced Palantir has been awarded up to $10 billion over 10 years for a new type of contract vehicle deemed an Enterprise Service Agreement – a move the Army says will help reduce cost and complexity when acquiring software. 

Through the agreement announced Thursday, the Army plans to consolidate 75 contracts — 15 of which Palantir is the prime contractor and 60 of which it is a sub contractor — into one massive single software contract, Danielle Moyer, executive director of the Army Contracting Command at Aberdeen-Proving Ground, told Breaking Defense. 

Such an agreement will allow the service to buy software at a discount, Moyer said, explaining that buying a bulk of software will inherently cost less than buying one software entity or package at a time.

“The more you use the Army’s buying power, the DoD’s buying power, the federal government’s buying power, we should leverage that to get the maximum discount from these commercial providers,” Moyer said. 

But the Army doesn’t necessarily plan to spend all $10 billion, Moyer clarified, adding that the service is only required to pay a minimum guarantee — which she didn’t disclose — and once the Army buys enough software with that amount, it can choose whether or not to use the remaining sum in the $10 billion. 

“We wanted to make sure that we included the potential for growth here, knowing that if any time there is a better deal, another competitor out there, or it doesn’t make any sense, we can come off it without any repercussions,” Moyer said. 

And though it’s a bulk buy, Moyer argued that it will give the service more flexibility and transparency over what it gets from Palantir. The service will no longer need to buy a package of software that includes capabilities or tools it predicts it won’t use. 

“Instead of just … when we go out and solicit for things, we just may have just one contract line item that says we want you to deliver this capability and the vendors propose back a whole capability. What we’ve done here is we’ve kind of broken out the things that we will need in different ranges, quantities, unit prices, products that’s different from services,” Moyer said. 

“So it’s kind of like an a la carte menu versus an all-you-can-eat or one-size-fits-all. It’s essentially like instead of paying for the whole package of something you’re paying for what you need.” 

The arrangement should also guard against duplication, which can often happen when buying an entire package that isn’t tailored to the service’s specific needs, she added. 

Though this is the Army’s first time initiating such an enterprise agreement, Moyer said the Army is already looking at establishing more. 

“This is our huge initiative, right? So not just focusing on the Palantir contract. We have minimal right now in negotiations, about 10 to 15 of these where, essentially what we looked at is, how many times have we bought the same commercial software across the Army, and would it make sense to bring that all together to get maximum discount.”

The move comes amid a Pentagon-wide push to streamline the acquisition of software, the news of which was first reported by Breaking Defense, and to modernize military networks. It also comes just a month after a Palantir executive, along with a trio of execs from other high profile tech firms, joined the Army to lead what the service described as a new innovation-focused effort.