Ministry of Defence: Palantir Contracts

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 10 February.

“Palantir is a strategic supplier to the Ministry of Defence, providing secure data integration, analytics and AI platforms that help to support operational planning and decision-making.

In 2022, the Conservative Government signed a three-year enterprise agreement with Palantir, in light of the growing significance of faster operational decision-making, and the impact that that technology has had in operations, including in Ukraine. This Government negotiated a new enterprise agreement to update the one signed in 2022, and that was published in a transparency note in December last year.

As part of the development of the new enterprise agreement, the MoD negotiated a strategic partnership with Palantir last September. The SPA reaffirms the strong relationship developed between UK defence and Palantir over the past decade, and includes new commitments that this Government secured from Palantir, including £1.5 billion investment into the UK, a new UK defence tech SME mentoring scheme to help companies grow and access the US market, and a commitment that London is to be the company’s European defence headquarters.

This Government took over what the Tories started in 2022, but we made it work better for Britain and better for our forces. As the Defence Secretary has said, the contract was his decision, and his alone. Peter Mandelson had no influence on the decision to award this contract. The deal that we struck with Palantir will significantly reinforce the innovation of our forces, and reinforce the safety of this country as we move towards war-fighting readiness”.

My Lords, everybody knew that this contract between Palantir and the MoD was going to expire in 2025, with, we understand, interest from British companies in tendering for the new contract. We now know that, in February 2025, the Prime Minister attended a meeting in Washington DC with Palantir, at which the now disgraced former ambassador, Peter Mandelson, who held shares in a company engaged by Palantir, was also present. In December 2025, the MoD, without competition, awarded a lucrative three-year contract to Palantir. There is a very unpleasant smell hovering over this particular bucket of fish. Will the Minister tell the Chamber what was discussed at that February meeting in Washington and, if he does not know, go away and write to me? Why, given the interest of British companies, was this contract not put out for competitive tender?

My Lords, I thank the noble Baroness, Lady Goldie, for the courteous way in which she asked the question. I will reflect on what she has said and respond appropriately once I have discussed it with others.

On the fundamental issue of single-source contracts, I can do no better than to quote the Conservative spokesperson in the other place, who said:

“It is true that many contracts in the MOD are rightly let on a single-source basis”.—[Official Report, Commons, 10/2/26; col. 691.]

In this particular instance, the MoD judged the capabilities and record of Palantir in the delivery of the systems that it has, and the artificial intelligence and data sharing that can take place, which started with the enterprise agreement that the last Government entered into in 2022, enabling Palantir to embed itself in all sorts of operations that were and are ongoing and will continue. The transparency notice that we published a few weeks ago, in December, laid out why the direct award was justified in this case, giving it to Palantir as a single-source contract and not making it available to more general competition. It was in our interests, the interests of the MoD and the interests of our country that we let that contract to Palantir to deliver the very special capabilities that it has.

My Lords, leaving aside the nature of the ownership of Palantir and the questionable involvement of Peter Mandelson, we have another key concern. On the Government’s own admission, this is a strategic contract. It seems that only Palantir is in a position to deliver this, otherwise it would have been a contested commissioning. The Minister in the Commons has said that the data will remain under sovereign protection. However, the core competence of developing the ways of using that data for AI will rest with Palantir and will be embedded, as the Minister has said, with its proprietary systems and software. Does the Minister share my concern that this is outsourcing what should be a sovereign capability—not just owning the data but knowing how to use it? Does he recognise that we will be reliant for crucial AI expertise embedded across the defence industry on a single US supplier?

I say to the noble Lord, who asks an important question with respect to this, that the UK defence data used and developed in Palantir’s software remains sovereign and under the control of the MoD. It resides in the United Kingdom. We have clear contractual controls in place to ensure that, as well as control over the data system that Palantir software sits upon. Any change from this cannot be conducted without the consent of the United Kingdom, so very real protections are in place to ensure that we can get the benefits from Palantir while protecting the data and information, so that we can allay the noble Lord’s concerns.

My Lords, when the Prime Minister and Lord Mandelson visited the HQ of Palantir, met the chief executive, toured the offices and obviously had meetings with many other representatives there, were minutes taken of that meeting?

No minutes were taken of that meeting, but it was a routine visit. The noble Lord will know from his own experience that going to visit businesses and industry is a significant part of the job. The noble Lord will have done it in the past; he will have gone with civil servants and others, maybe not industrialists but with industry representatives, to see that capability. That is not a criticism of the noble Lord; it was him doing his job. The Prime Minister went with the then ambassador to Palantir. As I understand it, during that visit he had a short presentation, followed by a tour of the premises and an introduction to members of staff. That is the Prime Minister doing his job: trying to develop and build business contacts with huge companies which are of benefit to our country.

My Lords, on 5 January, I asked the Government if they could give us details of contracts with Palantir and Anduril. The noble Baroness, Lady Anderson, said that, as an honorary captain in the defence of the country through the Royal Navy, it was of prime importance to her and she would write to me. She has obviously been incredibly busy, and a lot of information has come out since. I wonder if the Minister could let us know about contracts with Anduril too, please.

I missed that. Could the noble Baroness say with who?

With Anduril.

I will write to the noble Baroness about that. I will write, along with my noble friend Lady Anderson, to make sure that the noble Baroness gets one joint letter rather than two. I will take that on board and make sure that she gets it, and put a copy of it in the Library so that other noble Lords can see it as well.

My Lords, while I am not particularly worried about the way this contract was awarded, it does raise the issue of single companies being given large defence contracts without competition. It also raises value for money. I would hope that the defence department was looking at value for money and at making sure that where British industry can compete, it is encouraged to do so.

Again, that is an extremely important point. There are two things. Of course, single source is something that you try to avoid by having open competition, but there are circumstances where single-source contracts are in the interests of our country. Alongside that, as my noble friend hinted, we are trying to ensure that we develop UK industry and business as well. He will be interested that, as part of the enterprise agreement, it was announced in December 2025 that Palantir would commit £1.5 billion-worth of money to grow British business—to grow small and medium-sized enterprises—and develop skills right across the UK. We were conscious of the fact that it was a contract to a US-based company, as prestigious as it is, and wanted to ensure that the UK gained benefit from it as well. I hope that reassures my noble friend that, to some extent, we took the UK into account with that enterprise arrangement as well.