Palantir can compete for Army tactical intel upgrade

Data analytics vendor Palantir Technologies Inc. won a key court ruling this week in its bid to compete on a future contract to upgrade the Army's Distributed Common Ground System (DCGS).

Palantir, a highly touted Silicon Valley data-mining specialist, sued the Army under a 1994 acquisition law requiring government agencies to consider commercial products rather than building systems from scratch. A federal judge issued a ruling this week upholding Palantir's contention that the Army's failure to consider its technology violated the Federal Acquisition Streamlining Act.

The Army has been seeking contractors to fix the embattled tactical intelligence system launched in 1998. DCGS is intended to provide an interoperable suite of analytics tools for collecting and sharing intelligence in the field. Users of the Army's version of DCGS have complained that the system is too complex and unreliable. Some have opted to use commercial tools with capabilities similar to the Palantir platform.

An existing Palantir platform was developed in partnership with the CIA's venture capital arm, In-Q-Tel, and the company said in court filings it has delivered the system to the Marine Corps. U.S. Special Operations Command and the Defense Intelligence Agency.

An Army contract aimed at upgrading the DCGS is reportedly valued in the range of $200 million. Other military branches are using Palantir's software designed to analyze intelligence and the growing amounts of unstructured data being generated by far-flung sensors.

The Army began soliciting requests for a DCGS-Army "increment 2" software capability last year. Earlier this year, the U.S. Government Accountability Office denied a protest filed by Palantir, stating that a commercial solution would not meet the Army's requirements for the DCGS software upgrade. Palantir sued the Army in June.

 While the Army said this week it would await a formal ruling on the protest, the judge ordered the service to resume the bidding process for the DCGS overhaul and consider commercial solutions, thereby putting Palantir back in the running to supply its data mining system.

 The legal dispute underscores the Army's long-standing efforts to develop what was originally known as a "data fusion" capability that could be used to collect and disseminate tactical intelligence on the battlefield. With the rise of big data, the Army's efforts have long since been surpassed by a vibrant data analytics sector.

 Palantir, a rising star in the data analytics field with among the highest market valuations in Silicon Valley, is reportedly preparing to go public. Palantir officials may also have been emboldened to protest the DCGS contract given the Defense Department's embrace of Silicon Valley and its agile technology development.

 Another commercial innovator, Space Exploration Technologies Corp., provided something of a legal precedent last year when it successfully challenged competitor United Launch Alliance's lock on Air Force satellite launches.