Pentagon Steers $244M No-Bid Deal to Palantir, Skips Justification
A Feinberg memo directs up to $243.9M in sole-source Palantir work through 2027, without citing any of the legal grounds required to skip competition.
U.S. Air Force photo by Staff Sgt. John Wright, via DVIDS, public domain. File photo of the Pentagon taken May 15, 2023, not tied to this story's date.
Deputy Defense Secretary Steve Feinberg has directed up to $243.9 million in sole-source work to Palantir Technologies through March 2027, in a memo that does not cite any of the legal justifications federal rules require before an agency skips competitive bidding.
What the memo actually says, and does not say
Feinberg, the co-founder and former CEO of Cerberus Capital Management who was sworn in as deputy defense secretary in March 2025, issued the memo on Aug. 4. Washington Technology reported that it directs up to $243.9 million in sole-source work to Palantir through March 31, 2027, with language anticipating additional funding running from April 2027 through December 2028. The stated purpose, per the memo, is that Palantir’s software is “providing valuable support to improve efficiencies with the defense industrial base,” including flagging munitions-production delays and maintenance issues.
What the memo does not do is the story. The Federal Acquisition Regulation lists specific, narrow grounds an agency must cite to justify skipping competition: unusual and compelling urgency, only one responsible source capable of meeting the need, unacceptable delay from running a competition, national security, and a handful of others. Both Federal News Network and Washington Technology reported that Feinberg’s memo cites none of them, and that it does not specify which programs or contract vehicles the money will actually flow through. For a document authorizing a quarter-billion dollars in non-competed work, that is a thin paper trail.
“This memo is alarming in that it expresses the intention of entering into a sole-source contract without any reference [to] the need to comply with requirements for competition,” said Greg Williams, director at the Project on Government Oversight (Federal News Network, Aug. 12, 2026).
The second big Palantir number this summer
This memo is not Palantir’s only recent windfall from the Pentagon, and keeping the two straight matters. In July 2026, the Army signed a 10-year enterprise agreement with Palantir worth up to $10 billion, consolidating roughly 75 existing contracts into a single vehicle. That deal was framed publicly as an efficiency move, replacing a scattered portfolio of individual contracts with one negotiated arrangement. The August memo is a separate, additive pot of money on top of that consolidation, not a restatement of it. Together, the two moves in a single summer put well over $10 billion in Pentagon business either flowing to or anticipated for one company, a scale that makes the missing justification language in the smaller of the two memos more notable, not less.
A quarter-billion dollars against the scale of what Palantir already does for the Pentagon
Anchoring the $243.9 million figure helps explain why it reads as significant despite being a fraction of the Army’s $10 billion enterprise deal. Palantir has received $3.2 billion in Defense Department obligations since 2024, and roughly half of that has come through no-compete vehicles already, according to Washington Technology’s reporting. The new memo adds a further quarter-billion dollars to that no-compete share, extending a pattern rather than starting one. For comparison, $243.9 million is roughly what the Pentagon spends procuring a few dozen Joint Direct Attack Munition kits, a modest line item next to a major weapons program, but a substantial sum for software services awarded without a documented reason to skip competition.
Part of a broader shift, and a named reform program
The memo falls under Feinberg’s Business Operators for National Defense initiative, known as BOND, established in February 2026 to bring private-sector leaders into acquisition reform. That framing matters because it positions the Palantir memo as a deliberate policy choice rather than an isolated lapse. It also lands inside a broader, measurable trend: no-bid and no-compete contracts grew to 14.8% of all federal contract awards in the first half of 2026, up from 12.6% in 2025, according to Washington Technology’s reporting.
Figures per Washington Technology's reporting on federal contracting data. A roughly two-point rise across a single reporting period means a meaningfully larger share of federal dollars is now flowing without competitive bidding, the trend the Feinberg memo fits into rather than departs from.
That two-point rise, applied across the full scale of federal contracting, represents billions of dollars shifting away from competitive bidding in a single year. The Palantir memo is one visible data point inside that shift, not the whole of it, but it is the data point with a name, a dollar figure and a company attached, which is why it is drawing scrutiny that the aggregate trend line alone does not.
What accountability advocates are actually asking for
The complaint from POGO and similar watchdogs is not that Palantir’s software lacks value or that emergency and single-source procurement never has a legitimate place. It is procedural: FAR-mandated justifications exist specifically so that a paper trail shows why competition was skipped, allowing auditors, Congress and the public to check the Pentagon’s reasoning after the fact. A memo that authorizes nine-figure spending while skipping that documentation removes the mechanism by which anyone outside the department could verify the decision was sound, regardless of whether it actually was.
Sources
- Pentagon wants to spend millions on Palantir with few details — Federal News Network, Aug 12, 2026
- Pentagon hands Palantir up to $244M in no-bid work — Defense One (Washington Technology), Aug 13, 2026
Frequently asked questions
What exactly did the Pentagon approve? +
A memo from Deputy Defense Secretary Steve Feinberg directing up to $243.9 million in sole-source, non-competitively bid work to Palantir Technologies through March 2027, with more anticipated through 2028.
Why is "no-bid" controversial here specifically? +
Federal acquisition rules require agencies to cite a specific legal justification to skip competition. Watchdogs note the memo cites none of them and does not specify which programs the money funds.
Is this Palantir's first big Pentagon deal this year? +
No. It follows a July 2026 award of a 10-year, up to $10 billion Army enterprise agreement with Palantir that consolidated about 75 existing contracts into a single vehicle. This August memo is a separate, additional pot of money.
How unusual is a no-bid contract of this size? +
No-bid awards have been rising Pentagon-wide, 14.8% of all federal contract dollars in the first half of 2026 versus 12.6% in 2025, so this fits a broader trend rather than being a one-off.
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