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Palantir Forecasts Major Increase in Its Share of DoD, Other Federal Software Business - Aviation Today

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Palantir CEO Alex Karp. (Keystone)

Denver-based Palantir Technologies, Inc. forecasts a major increase in the company’s share of DoD, intelligence community, and other federal software business, as the company seeks to become the “central operating system for all U.S. defense programs,” per last month’s prospectus for the company’s initial public offering (IPO).

While the company has been a significant player in the provision of artificial intelligence (AI) capabilities for the Pentagon, Palantir has also had trouble turning a profit. For example, while Palantir had revenues of nearly $743 million last year–25 percent higher than 2018, it reported net losses of nearly $580 million. That is starting to change, per Palantir, as it has recently seen a “significant decrease in the time and number of software engineers required to install and deploy” the company’s software.

Palantir estimated its total addressable market (TAM) “in the government sector, including government agencies in the United States, its allies, and in other countries abroad whose values align with liberal democracies, to be approximately $63 billion,” including $26 billion in the United States.

Co-founded by PayPal entrepreneur Peter Thiel and several colleagues in 2003 “to provide software for use in counterterrorism operations,” per the Palantir prospectus, the company has expanded its footprint to include contracting with the U.S. Army, Navy, Air Force, Special Operations Command, intelligence community, and federal agencies, such as the Department of Homeland Security, Centers for Disease Control, Department of Agriculture, Food and Drug Administration and Securities and Exchange Commission (SEC).

The big data analytics provided by Palantir may be of particular use in Project Maven, which has looked to develop an artificial intelligence tool to analyze full-motion video (FMV) surveillance footage collected by unmanned aircraft and decrease the workload of intelligence analysts.

Google was the prime contractor for Project Maven but dropped out in 2018 after receiving pushback from employees about the company’s tools being used for an AI drone imaging effort. Palantir has assumed Google’s role, Business Insider has reported.

On May 20, 2017, nearly a month after the start of Project Maven, former Deputy Defense Secretary Robert Work assigned to the Algorithmic Warfare Cross-Functional Team (AWCFT) under the Undersecretary of Defense for Intelligence the task of the automation of Processing, Exploitation, and Dissemination (PED) of tactical and mid-altitude full-motion video from drones in support of operations to defeat ISIS insurgents.

A recent paper for the Modern War Institute at West Point by Tufts University Prof. Richard Shultz and United States Special Operations Commander Army Gen. Richard Clarke said that Project Maven could serve as a springboard to transform DoD “from a hardware-centric organization to one in which AI and ML [machine learning] software provides timely, relevant mission-oriented data to enable intelligence-driven decisions at speed and scale. When that happens, U.S. commanders will be able to gain decisive advantage over current and future enemies.”

The DoD Joint Artificial Intelligence Center’s (JAIC) Smart Sensor project is integrating Project Maven with development of the Air Force Research Laboratory’s Agile Condor wide area surveillance pod to enable autonomous tracking on future battlefields.

Agile Condor is to undergo classified testing over the next year after a recent flight on the General Atomics Aeronautical Systems, Inc.(GA-ASI) MQ-9 Reaper at GA-ASI’s Flight Test and Training Center in Grand Forks, North Dakota.

Palantir’s AI investments are apparently full steam ahead. Billionaire Thiel and current Palantir CEO Alex Karp, Thiel’s classmate at Stanford Law School, are at opposite ends of the political spectrum, as Thiel has supported President Trump, and Karp is an avowed progressive “socialist” who has adamantly opposed Trump. They nevertheless have come to a meeting of the minds in supporting U.S. military forces and intelligence agencies.

“Some companies work with the United States as well as its adversaries,” per the Palantir prospectus. “We do not. We believe that our government and commercial customers value this clarity.”

Thiel, a Facebook board member, and Karp have railed against Google and Silicon Valley technologists for being averse to selling to DoD, yet selling products to China and other potential U.S. adversaries, while others have said that such firms’ work with foreign countries has not posed security risks to the United States.

Palantir’s prospectus said that its U.S. government business has been looking up since 2016.

Palantir successfully sued the Army in 2016 allowing the company to compete for the Distributed Common Ground System-Army (DCGS-A) work, challenging the service’s assertion that its commercial data management system would not meet the program’s technical requirements.

DCGS-A is the Army’s system to manage intelligence operations on the battlefield and visualize data collected from tactical sensors.

Along with BAE Systems and Raytheon, Palantir has won potentially $1.7 billion in DCGS-A contracts in 2018 and earlier this year.

“Our momentum in the U.S. government sector has accelerated significantly since 2018, following our successful lawsuit against the U.S. Army to enforce the Federal Acquisition Streamlining Act of 1994,” per the Palantir prospectus. “The law requires the U.S. federal government to consider commercially available software before attempting to start custom-development projects on its own. The outcome of the lawsuit has transformed the way in which the U.S. military purchases software on behalf of its soldiers and service members.”

“Our victory in federal court has already had a significant impact on our business,” Palantir said. “We generated a total of $51.9 million in revenue from our U.S. Army accounts from 2008 through September 2018, when the federal court ruled in our favor. After the ruling, in less than two years, between October 2018 and June 2020, we generated $134.5 million in revenue from those accounts.”

The prospectus said that U.S. Army special operations commanders in the Middle East began using Palantir software in 2008 for mission planning and combat and that “every battalion” in the Army “uses our software for intelligence analysis.”

2008 was the year Palantir released its first software platform–Palantir Gotham–for intelligence community users to allow them to identify patterns in such datasets as signals intelligence and confidential informants. DoD then started using Gotham to investigate threats and protect soldiers from improvised explosive devices (IEDs), Palantir said. Allies now deploy Gotham, and Palantir is looking to expand its presence abroad.

“We intend to pursue significant expansion of our government work with U.S. allies abroad,” per the Palantir prospectus. “Recent expansion with law enforcement agencies in Europe demonstrates our ability to capture these opportunities. When ISIS attacked hundreds of people in 2015 and 2016–in Paris, Brussels, Barcelona, and Berlin–our platforms became a key means of communication and information sharing between European intelligence agencies and the rest of the world.”

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