Palantir and Anduril join forces with tech groups to bid for Pentagon contracts
Consortium likely to include Elon Musk’s SpaceX in move to grab a bigger slice of $850bn US defence budget
Palantir and Anduril, two of the largest US defence technology companies, are in talks with about a dozen competitors to form a consortium that will jointly bid for US government work in an effort to disrupt the country’s oligopoly of “prime” contractors.
The consortium is planning to announce as early as January that it has reached agreements with a number of tech groups. Companies in talks to join include Elon Musk’s SpaceX, ChatGPT maker OpenAI, autonomous-ship builder Saronic and artificial intelligence data group Scale AI, according to several people with knowledge of the matter.
“We are working together to provide a new generation of defence contractors,” said one person involved in developing the group.
The move comes as tech companies seek to grab a bigger slice of the US government’s huge $850bn defence budget from traditional prime contractors such as Lockheed Martin, Raytheon and Boeing.
The consortium will bring together the heft of some of Silicon Valley’s most valuable companies and will leverage their products to provide a more efficient way of supplying the US government with cutting-edge defence and weapons capabilities, according to a second person involved.
It comes as defence tech start-ups have attracted record amounts of funding this year, as investors bet they will be among the winners of higher federal spending on national security, immigration and space exploration under Donald Trump’s incoming government.
Wars in Ukraine and the Middle East and geopolitical tensions between the US and China have heightened the government’s reliance on tech companies developing advanced AI products that can be used for military purposes, and encouraged investors to the sector.
Palantir’s share price has skyrocketed by 300 per cent in the past year, giving the company a market capitalisation of $169bn — larger than Lockheed Martin.
The data intelligence group was co-founded by tech investor Peter Thiel, who also provided the initial backing for Anduril, which launched in 2017 and was this year valued at $14bn.
Meanwhile, SpaceX was valued at $350bn this month, making it the world’s largest private start-up, and OpenAI has soared to a valuation of $157bn since it was founded in 2015.
Each of the companies has attempted to grab a slice of the government’s defence budget. While SpaceX and Palantir have won large public contracts going back two decades, some are newer to government procurement. OpenAI updated its terms of service this year to no longer explicitly prohibit the use of its AI tools for military purposes.
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