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Palantir and Anduril join forces with tech groups to bid for Pentagon contracts


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Palantir and Anduril, two of the largest US defense 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 plans to announce in early January that it has reached agreements with several technology groups. Companies in talks to join include Elon Musk’s SpaceX, ChatGPT maker OpenAI, autonomous shipmaker Saronic and artificial intelligence data group ScaleAI, according to several people with knowledge of the matter.

“We are working together to deliver a new generation of defense contractors,” said a person involved in the group’s development.

comes as steps Technology company Lockheed is seeking to wrest a larger share of the US government’s massive $850 billion defense budget from traditional prime contractors such as Martin, Raytheon and Boeing.

The consortium will bring together the portfolio of some of Silicon Valley’s most valuable companies and leverage their products to provide the US government with a more efficient way to deliver advanced defense and weapons capabilities, according to a second person involved.

It comes as Defense technology start-ups This year has attracted a record amount of funding, as investors bet they will be among the winners of higher federal spending on national security, immigration and space exploration under the incoming administration of Donald Trump.

Wars in Ukraine and the Middle East and geopolitical tensions between the United States and China have increased the government’s reliance on tech companies developing advanced AI products that can be used for military purposes and encouraged investors in the sector.

Palantir’s share price has risen 300 per cent in the past year, giving the company a market capitalization of $169bn — bigger than Lockheed Martin. The data intelligence group was co-founded by tech investor Peter Thiel, who provided early backing for Anduril, which launched in 2017 and was valued at $14bn this year.

Meanwhile, SpaceX was valued at $350bn this month, making it the world’s largest private start-up, and OpenAI has been valued at $157bn since it was founded in 2015.

Each company tried to capture a portion of the government’s defense budget. SpaceX and Palantir won large public contracts two decades ago, some new to government procurement. OpenAI updated its terms of service this year to not explicitly prohibit the use of its AI tools for military purposes.

US defense procurement has long been criticized as slow and anti-competitive, favoring a small number of decades-old primes like Lockheed Martin, Raytheon and Boeing. These huge conglomerates typically produce ships, tanks, and aircraft that are expensive and take years to design and build.

Silicon Valley’s burgeoning defense industry has prioritized the production of small, cheap, autonomous weapons that it claims will better protect the United States and its allies in modern conflicts.

One person involved in the development of the consortium described it as “aligning industry” to “carry out the Department of Defense’s technological priorities” and “solve critical software capability issues.”

Some of the tie-ups among the expected technology groups in the consortium have already been agreed and integration work will begin immediately.

Palantir’s “AI Platform”, a cloud-based data processing provider, was this month integrated with Anduril’s autonomous software “Lattice” to provide AI for national security purposes.

Similarly, Anduril has combined its counter-drone defense system with OpenAI’s advanced AI models to jointly work on US government contracts related to “aerial threats”.

A joint statement by Anduril and OpenAI about that partnership aims to “ensure that the US Department of Defense and the intelligence community have access to the most advanced, effective and secure AI-powered technologies available in the world.”

Anduril, OpenAI and ScaleAI declined to comment on the development of the consortium. Palantir, SpaceX and Saronic did not respond to requests for comment.



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