“What I figured out soon after I started,” recalls Philippone, “was that when it comes to procurement, there are two sovereigns at the Pentagon: the people who actually use the stuff in the field and the people who procure it—the ones you have to sell to—who don’t use it. I had no idea how to sell to them.”
Philippone hired consultants and lobbyists to help him break through. But, he says, “they suggested we team up with Lockheed or Northrop or some of the others, who could sell it.” In those early discussions, he says, “we were told that the key is to focus on the technical requirements” that the procurement people spelled out. “They said, ‘Just give the government exactly what they want.’ We said, ‘That’s stupid.’ If they ask for a totally broken hippopotamus, we’re not going to say, ‘Yeah, we’ll do that.’ ”
That was from a very excellent report at Fortune on the tech firm Palantir’s attempts to make it into defense acquisition (back from 2017). Needless to say, even when top generals are impressed with Palantir’s data analytics products, it’s unlikely that the procurement system will allow a new entrant without a fight.
This has apparently been going on for a while. In 2010, then General Michael Flynn submitted a Joint Urgent Operational Needs Statement (JUONS), which allows a program to skirt past the drawn-out JCIDS requirements process. Top level intervention allowed Palantir to supply some Special Forces and Marine units. However, it did not displace the incumbent contractor’s position (Lockheed, Raytheon, Northrop) with poorly performing DCGS-A program:
But the Army procurement bosses still resisted. All told, 28 urgent pleas from the field came in over four years. All cited the failure of DCGS-A and the success of Palantir, which was continuing to proliferate among Special Forces and other smaller commands…
The response from the Pentagon acquisition bureaucracy was threefold: Palantir salesman were out there ginning up these requests (which was often true); Palantir couldn’t do the job (which was contradicted by the success it was having among the units that used it, and which the acquisition brass would have no way of knowing because they had never tested it); and that DCGS-A worked fine and was in the process of being improved.
Palantir responded by buying more lobbyists and moving into a Georgetown office. Still, when the Army recompeted the DCGS work in 2014, it “responded to none of Palantir’s submissions.”
So, Palantir didn’t protest the particular contract award, it protested the fact that the Pentagon was not following the law! The Army was neglecting commercial products that demonstrably fulfilled military requirements at a much lower cost. The 1994 Federal Acquisition Streamlining Act gave preference to commercial products where viable.
In 2016, the GAO ruled against Palantir because the agencies had discretion. And so Palantir filed another suit, this time with some sympathy from the bench. Looks like Palantir is getting some bites at the apple, but generally the company received the finger from the acquisition process at the same time its officials are crying for speed, innovation, and startups.
Here’s a bit more on the story. Palatir has been hinting at going public, and could fetch $41 billion.
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