Palantir Technologies Inc. scored another win in Washington Tuesday, securing a contract worth as much as $823 million to provide software to the Department of Defense, according to communications reviewed by Bloomberg.
The four-year deal represents more than a decade of work by the Palo Alto, California-based data mining startup to break into the club of existing defense contractors, and bolsters the company’s prospects as it prepares it to go public.
The contract is the second half of a larger project. Palantir and Raytheon Co. won the first half of the deal in 2018, worth $876 million. This second part involves Palantir working with BAE Systems to replace the U.S. Army’s Distributed Common Ground System, used for aggregating and analyzing data, which has faced technical challenges. Palantirsued the Army in 2016 to win the right to compete for the new contract after the U.S. Government Accountability Office determined the old system was underperforming and over budget.
It is unclear how revenue from the contract will be split between Palantir and BAE Systems.
The deal will increase annual sales at Palantir’s government division from its current $500 million or so, according to people familiar with Palantir’s finances who asked not to be identified discussing private information.
Investor Peter Thiel co-founded Palantir in 2004, and thecompany’s software has been used for controversial ends like enabling the immigration deportation policies championed by President Trump, as well as for philanthropic ones like preventing sex trafficking and finding missing children.
About half of Palantir’s business relies on deals with large corporate customers like Merck KGaA and Airbus SE, which use the software to manage drug discovery and improve supply chain logistics.
The company is exploring both an IPO and a direct listing, but does not yet have a target date for going public, Bloomberg has reported.
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