Palantir and Anduril join tech groups to bid for Pentagon contracts

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Palantir and Anduril, two of the largest US defense technology companies, are in talks with about a dozen competitors to form a joint venture that will bid for government work of the US in order to break the country’s oligopoly of “prime” contractors.

The consortium plans to announce in early January that it has reached agreements with several technology groups. Companies in talks to join include Elon Musk’s SpaceX, ChatGPT maker OpenAI, independent shipbuilder Saronic, and artificial intelligence group Scale AI, according to several people with knowledge of the matter.

“We are working together to deliver a new generation of defense contractors,” said one person involved in developing the group.

Migration comes as technology companies seek to take a larger share of the US government’s massive $850bn defense budget from traditional contractors such as Lockheed Martin, Raytheon and Boeing.

The consortium will bring together some of Silicon Valley’s most important companies and will use their products to provide a more efficient way to provide the US government with defense capabilities and weapons, according to a second person involved. .

It comes like security technology startup has attracted a lot of money this year, as investors are betting that it will be among the winners of the biggest federal funding on homeland security, immigration and space surveillance under the incoming administration of Donald Trump.

The wars in Ukraine and the Middle East and the political conflict between the US and China have increased the government’s confidence in technology companies that produce advanced AI products that can be used for military purposes, and encouraged investors in this sector.

Palantir’s share price is up 300 per cent in the past year, giving the company a market capitalization of $169bn – bigger than Lockheed Martin. The data intelligence group was founded by the technology entrepreneur Peter Thiel, who also provided the first support for Anduril, which started in 2017 and this year was $ 14bn.

Meanwhile, SpaceX was valued at $350bn this month, making it the world’s largest private startup, and OpenAI has risen to a value of $157bn since it was founded in 2015.

Every company has tried to take a share of the government’s defense budget. While SpaceX and Palantir have won major public contracts going back two decades, others are new to government procurement. OpenAI updated its terms of service this year to no longer expressly prohibit the use of its AI tools for military purposes.

US defense procurement has long been criticized as slow and anti-competitive, favoring a small number of decades-old primes, such as Lockheed Martin, Raytheon and Boeing. These large assemblies often produce ships, tanks and aircraft that are expensive and take years to design and manufacture.

Silicon Valley’s burgeoning defense industry has spearheaded the development of small, low-cost, autonomous weapons that it says will better protect the US and its allies in modern conflict.

One person involved in the development of the consortium described it as “connecting industry” in order to “fulfill the Defense Department’s technical priorities” and “solve critical software capability issues.” .

Some of the relationships between the technology groups expected to be in the consortium have been agreed upon and the integration work will begin immediately.

Palantir’s “AI Platform”, which provides cloud-based data processing, this month has been integrated with Anduril’s autonomous software, “Lattice”, to provide AI for national security purposes.

Similarly, Anduril combined its counter-drone defense systems with OpenAI’s advanced AI models to jointly work on US government contracts related to “aerial threats”.

A joint statement from Anduril and OpenAI about the partnership says it is “dedicated to ensuring that the Department of Defense and the United States intelligence community have access to advanced, efficient and secure artificial intelligence systems.” is the world’s most accessible AI”.

Anduril, OpenAI and Scale AI declined to comment on the development of the consortium. Palantir, SpaceX and Saronic did not respond to requests for comment.