Palantir Set to Win Over $28 Million No-Bid UK Government Deal: Why Is PLTR Facing Controversy Again?

TradingKey - According to a Financial Times report on September 8, the UK's National Energy System Operator (NESO) plans to directly award Palantir (PLTR) a software services contract worth approximately £21 million (about $28.43 million) without competitive bidding.

[Source: CFP Core]

Official procurement documents show that the contract is worth approximately £21.24 million including tax (£17.70027 million net) and remains to be signed. Two of NESO's key operations, Connections and Skip Rates, run on the Palantir Foundry platform.

NESO stated that replacing the vendor would require rebuilding or significantly adjusting the existing data analytics environment, while involving data migration, security certification, and staff training, which would increase costs, resource commitment, and delivery risks.

Based on the aforementioned technical reasons, NESO chose a direct award pursuant to Section 41 and Paragraph 6 of Schedule 5 ("absence of competition for technical reasons") of the UK Procurement Act 2023. The contract is primarily intended to maintain the operation of existing systems, and NESO stated that a long-term solution will still be pursued through competitive procurement.

Palantir's UK Public Sector Contracts Keep Growing

Palantir has secured multiple UK public sector contracts in recent years.

In December 2025, the UK Ministry of Defence directly awarded Palantir a three-year enterprise agreement worth approximately £240.6 million, with the contract beginning in April 2026.

In the healthcare sector, a consortium led by Palantir won the NHS England Federated Data Platform contract through an open competitive tender in 2023, worth up to £330 million over a maximum of seven years.

In June this year, the UK House of Commons Science, Innovation and Technology Committee released a report warning of the public sector's deepening reliance on a small number of large tech suppliers. The committee described Palantir's expanding presence in the UK public sector as an "unacceptable vulnerability" and recommended that the government use the 2027 break clause in the NHS contract to evaluate alternative options.

London Police £50 Million Contract Enters Litigation

In May this year, the Mayor's Office for Policing and Crime (MOPAC) blocked the Metropolitan Police Service from proceeding with a Palantir software contract worth up to £50 million.

MOPAC stated that the Metropolitan Police failed to submit a procurement strategy in advance as required, and that the procurement process did not adequately demonstrate value for money.

Palantir subsequently filed a lawsuit in the UK High Court seeking to overturn the decision. Palantir argued that MOPAC inappropriately considered the company's "values and ethics" during the decision-making process and that such factors should not serve as a basis for rejecting the contract. MOPAC, meanwhile, maintained that blocking the contract was primarily based on procurement procedures and value-for-money issues.

Metropolitan Police Commissioner Mark Rowley warned that the efficiency savings of around 700 roles originally expected to be achieved through the system have been impacted, and if an alternative solution cannot be found quickly, the Met may need to compensate by cutting frontline services.

The case is expected to go to a full trial in January 2027, with the central dispute being whether MOPAC's procedural and legal basis for blocking the contract was lawful.

What Does a £21 Million Contract Mean for PLTR?

From a commercial perspective, NESO's direct award arrangement reflects the high switching costs of Palantir software among existing clients. Foundry is already used in NESO's critical operations, and switching platforms would entail additional costs such as system adjustments, data migration, security certification, and staff training.

While this helps Palantir maintain existing client relationships, it also comes with heightened scrutiny. The UK Parliament has already called on the government to reduce reliance on a small number of large tech vendors for critical public services, while the London police contract dispute has entered judicial proceedings, with the High Court set to review whether MOPAC's decision to block the contract was lawful.

Palantir has already entered the UK's defense, healthcare, and energy sectors through various procurement methods. For PLTR investors, the steady increase in UK public sector contracts provides additional revenue streams for Palantir's government business; however, as contract sizes and scope of application expand, procurement compliance, vendor concentration, and government evaluations of alternative solutions could also impact the progress of subsequent contracts.

Therefore, going forward, what is worth monitoring is not only whether Palantir can secure more UK government contracts, but also the outcome of the competitive procurement for NESO's long-term project, the NHS's decision at the 2027 termination node, and the final result of the London police lawsuit.

As of press time, Palantir shares were down 0.89% in pre-market trading at $172.78.

[Source: TradingView]