A Pentagon memo tells staff to spend $244m with Palantir. Its subject line is ‘Funding Palantir’

Government software is usually bought by asking several companies to bid. A department writes down what it needs, suppliers compete, and the file records why the winner won.

A memo drafted inside the US Defense Department on 4 August did something different. It named the supplier first.

US Deputy Secretary of Defense Stephen Feinberg directed subordinates to buy up to $243.9m of services from Palantir by 31 March 2027, without a competitive process, The Register reported, citing a source. The subject line is “Funding Palantir”.

The memo goes further than that single figure. It also tells the department’s acquisition and comptroller chiefs to work with military leaders on finding more money for the company, covering April 2027 to the end of 2028.

What the memo says, and what it leaves out

Palantir is “providing valuable support to improve the efficiencies with the defense industrial base”, the memo states. It credits the company’s software with helping the department understand delays in producing and maintaining munitions and vehicles.

Nick Wakeman at Washington Technology also viewed the memo and noted what is absent. Feinberg names no specific contract, no contract vehicle, and none of the legal grounds that allow a department to skip a competition.

Those grounds exist and are narrow. Urgency, a single responsible source, critical follow-on work, national security. The Federal Acquisition Regulation sets out how a department documents which one applies.

One more detail is odd. The memo is on letterhead reading Deputy Secretary of War. The Trump administration uses that name for the department, but the legal renaming has not happened.

The statute nobody cited

Greg Williams, who directs the Center for Defense Information at the Project On Government Oversight, pointed The Register at the governing law. Competitive contracting is the default, and the exceptions sit in 10 USC 3204.

That statute is specific about the paperwork. A contracting officer must justify using non-competitive procedures in writing, and certify that the justification is accurate and complete.

Williams was careful about what the memo proves. It might be read as a deputy secretary asking subordinates for ideas, he said. But the absence of any reference to that requirement suggests they are either unaware of it, or do not think it needs restating.

The department disagrees that anything unusual is happening. A Department of War official told The Register the memo is “standard practice” and part of engagements run through a programme called Business Operators for National Defense.

Similar memos go out “across a wide range of our industry partners”, the official said, and the approach “is not exclusive to any single vendor”. Palantir did not respond to a request for comment.

Half of Palantir’s federal money already arrives this way

The number that gives the memo its context is not the $243.9m. It is what Palantir’s federal book already looks like.

The company has taken $3.2bn in federal contract obligations since 2024, according to GovTribe data cited by Washington Technology. Roughly half of that came through contracts nobody else bid on.

Its existing no-compete work includes an Agriculture Department award for a farm data programme, and a separate one for the same department’s return-to-office push. Last year it signed an Army enterprise agreement worth up to $10bn over a decade, CNBC reported, consolidating many of its existing contracts into one.

The wider trend is measurable and it is moving. Non-competitive awards made up 14.8% of all federal contract awards in the first half of 2026, against 12.6% in the same period of 2025.

That is the story underneath the memo. One company’s good week is also a data point in how the US government has started buying software.

Who owns the company doing the buying

Ownership questions are unavoidable here, and the specific answers matter more than the general suspicion.

Feinberg’s own financial disclosures do not list Palantir, according to ProPublica’s tracker of Trump appointees. His former firm Cerberus Capital Management does not appear to hold a stake either, based on its most recent 13F filing.

Senator Elizabeth Warren wrote to Feinberg last month about conflicts of interest, urging him to cut ties with Cerberus and recuse himself from matters involving it. That letter concerned the Golden Dome missile defence programme, not Palantir.

The wider picture is different. ProPublica’s database shows at least 100 administration officials with some investment in the company. President Donald Trump’s 2025 certified disclosure lists a Palantir holding of at least $1m.

Palantir was co-founded by Peter Thiel, a major Trump donor and adviser in his first term. Vice President JD Vance came up through Thiel’s orbit. None of that is a finding about this memo. It is the environment the memo was written in.

The company is not short of customers

Palantir reported second-quarter results on 3 August. Revenue rose 93% to about $1.9bn, and it raised full-year guidance to roughly $8.15bn. The shares jumped 12% the following day.

US government revenue grew 90% year on year to $809m. That is the segment this memo would add to, and it is already the fastest-growing part of the business.

Chief executive Alex Karp has spent the year attacking the big American AI labs, in an AI sovereignty manifesto and elsewhere, and promoting open-weight models including Chinese ones. The company that sells the Pentagon its data layer is not especially aligned with the companies selling everyone else their models.

Europe is walking the other way

This is where the story stops being a US procurement dispute. While Washington deepens a relationship without competing it, several European governments are doing the opposite.

France’s foreign intelligence service is dropping Palantir for a homegrown alternative. France and Germany are backing a European rival built around sovereign military AI.

The UK went the other way and has questions of its own. Palantir holds about £670m of UK contracts and paid £2m in corporation tax in 2024. Its work with NHS England has already produced a patient data disclosure error.

Both continents are asking a version of the same question. Europe is asking whether to depend on the company at all. The United States is now asking whether it needs to ask anyone else.

What would settle it

The memo is a draft, and The Register’s source could not say whether the deal has been finalised. That matters, because a directive to find funding is not the same as an award.

The thing to watch is the paperwork rather than the politics. If the money moves, a contracting officer has to sign a written justification naming which statutory exception applies. That document is the test, and it does not exist yet.

The department says memos like this one go out about many suppliers. It has not published them. Releasing a few would settle the question faster than anything else in this story.