When a little-known Silicon Valley software startup began vying for national security contracts, it went up against an entrenched bureaucracy and opposition from major contractors skilled in the Washington game.

But quickly, Palantir began pulling pages from the defense industry's own playbook — bulking up on lobbyists, challenging the Pentagon’s contracting rules and getting members of Congress to sprinkle favorable language into defense legislation. Seven years later, the secretive firm has landed $1.2 billion worth of federal business, and critics say the legislative favors it has secured will give it a leg up on billions more.


Representatives of the firm — founded by venture capitalist and prominent Donald Trump supporter Peter Thiel — insist it remains an outsider in a Washington culture deeply wedded to the status quo.

But a review of public documents and interviews with key players shows the company is no stranger to Beltway politics and influence. Its lobbying expenditures more than tripled to more than $1 million in a few short years as it enlisted lawmakers such as Republican Sens. John McCain of Arizona and Tom Cotton of Arkansas to help it compete against established players like Raytheon and Northrop Grumman. Now, about 40 percent of Palantir ’ s business comes from government clients, and it appears to be winning a fight with the Army over a $3 billion program to build a new battlefield intelligence network.

“The other companies were asleep at the switch,” said an industry consultant who works for one of Palantir's competitors , speaking on condition he not be identified.

“It’s a company that couldn’t win a contract and now doesn’t want another company to win,” added a congressional aide who has seen the operation up close but is not permitted to speak publicly. “It happens all the time. They’re just being more aggressive about it than normal.”

Palantir, which has repeatedly declined to speak publicly, got an inside track soon after its inception in 2004. (Its name comes from the magical crystal balls in the “ Lord of the Rings ” trilogy.) Thiel, the co-founder of PayPal, got the C entral I ntelligence Agency to invest $2 million through In-Q-Tel, the agency’s venture capital arm. That granted Palantir access to the inner workings of government contracting — and it quickly learned how the game is played.

Palantir hired a series of power players in 2010: At lobbying firm Patton-Boggs, they i ncluded former Sens. John Breaux (D-La.) and Trent Lott (R-Miss.) and a group of their former congressional aides who lobbied on “ funding for intelligence analysis tools ” and defense appropriations bills and advocated before a variety of agencies.

Also hired to influence the defense appropriations process was Alexander Silbey of ATS Communications, who spent several years on Capitol Hill, including as a senior policy adviser to Rep. James Clyburn (D-S .C.), a member of the House Democratic leadership. At Kadesh and Associates LLC, it was Mark Kadesh, former chief of staff to Sen. Dianne Feinstein (D-Calif.), and Christian Kierig, who was a legislative assistant for Feinstein.

While still a fraction of what the Pentagon ’ s biggest contractors spend, Palantir ’ s lobbying expenditures grew from $300,000 in 2010 to over $1 million by 2015.

The company ’ s federal business also steadily grew. Since 2009, the company has landed contracts worth at least $1.2 billion from the Marine Corps, Defense Intelligence Agency, Department of Justice, FBI, State Department, C IA , Internal Revenue Service, Immigration and Customs Enforcement, Department of Homeland Security and the National Center for Missing and Exploited Children, according to a former lobbyist for the firm.

The government has bought Palantir’s data-crunching technology to help locate roadside bombs and to pick up signs of insider trading, credit card fraud, disease outbreaks and even missing children. Most recently, the firm in May snagged a five-year, $222 million contract from the U.S. Special Operations Command.

In its latest fight, Palantir representatives claim the Army is purposely shutting out innovation, despite evidence that the company ’ s solution for a new battlefield intelligence network is more effective than the initial version that was developed by Raytheon, Northrop Grumman and other contractors.



Indeed, the company honed its approach to federal contracting when it began to aggressively take on the Army ’ s lucrative Distributed Common Ground System program in 2010. In that fight, the Army declined to purchase the company ’ s software , even though some units were clamoring for it — and only grudgingly allowed limited use of its platform.

In 2011 , Palantir hired retired Marine Corps Brig. Gen. Terry Paul of Cassidy & Associates as a lobbyist. Paul, who did not respond to several requests for an interview, previously served for a decade as the Marine Corps ’ liaison with the Senate before overseeing all of the service ’ s legislative interactions.



Paul is also a close friend of an influential political family in the defense world: the Hunters of Southern California. Duncan Hunter Sr. is a former Republican chairman of the House Armed Services Committee , and his son Duncan Hunter Jr., a Marine Corps Reserve officer, currently sits on the panel.

Paul served as the master of ceremonies when the senior Hunter ’ s official portrait was unveiled in 2009 and recalled how the chairman asked him at the last minute to stump for him in South Carolina during his short-lived 2008 presidential campaign. Paul recalled that , when he asked whether the candidate had prepared remarks for him to deliver, Hunter replied: “ No, I don’t really have anything. You are pretty familiar with my position on things; just go with that. ”

The younger Hunter has since emerged as Palantir’ s biggest supporter on Capitol Hill — after he was introduced to Palantir officials by Paul, who still lobbies for the firm, according to the former company lobbyist. In 2013 , Hunter got the Army to review its strategy for developing the battlefield intelligence network.



The company more recently got the support of Cotton, a former Army Ranger, and briefed him on its technology last year, according to a staffer who said the Arkansas Republican senator had picked up frustrations with the Army ’ s approach to the intelligence system when he was in the House in 2013.

Hunter and Cotton this year have helped Palantir immensely in its push to gain access to the Army contract.

Language offered by Hunter in the House fiscal 2017 National Defense Authorization Act would halt the Army from further developing the next version of DCGS if it is found “ such capability is available for purchase in the commercial market. ”

Hunter ’ s spokesman, Joe Kasper, insists that Paul is just one of a number of officials who have influenced the congressman s views.

“ General Terry Paul is a long-time friend, and is one of several lobbyists working Palantir ’ s issues, ” Kasper wrote in an email. “ What specifically and to what extent, I have no idea. ”

He also said Hunter ’ s concerns about the Army project “ first arose via the 82nd Airborne Division and its urgent request ” for Palantir ’ s software. “ Years ago ; 2012 , I seem to recall. ”

The pro-Palantir language in the Senate defense bill, crafted by Cotton and McCain , the Senate Armed Services chairman, more pointedly directs the Army to swap out the software already fielded as part of the Distributed Common Ground Station with a “ commercial alternative. ”

One of Palantir ’ s current lobbyists, who like the others w as unwilling to associate publicly with the company ’ s marketing campaign, described the firm ’ s maturing Washington strategy in recent years aimed at winning a piece of the Army program.

“When you’re an outsider, you’re trying to navigate the bureaucracy, ” he said. “ You get experts in the process to bridge the gap between Silicon Valley and the Pentagon. Once a few members of Congress realized the problems with DCGS, and Palantir started telling their story in terms the Hill understands, things started to click. ”

“ They provided good, policy-based arguments and the pendulum swung, forcing the Army to defend the program, which had a history of problems, ” he added. “ With commercial products to fill the void, the pressure really built. ”

But some in Congress are pushing back on the language in the proposed Defense Authorization Act, deriding it as a “ forced procurement ” of commercial software over the solutions offered by defense contractors.

In a recent letter to the leaders of the House and Senate Armed Services Committees, three senators and three congressmen voiced their “ serious concerns ” with the two provisions, asserting that such language would “ unduly limit competition. ”

The congressional aide agreed. The language “ shuts down the program that’s fielding upgrades with money Congress has already authorized and appropriated, ” he said. “ Congress should probably do something about the program to encourage the Army [to] keep fixing it, but what they’ve proposed is just way, way too much.”



Spokespeople for Raytheon and Northrop Grumman declined to discuss their tussle with Palantir.





Other Palantir boosters liken the company ’ s struggle to SpaceX, the commercial space launch company that fought for years to gain entry into the military market and successfully opened the competition by taking the Air Force to court.

The Army’s leaders and its longtime contractors are smarting from Palantir ’ s recent move to sue the service to block a planned $206 million contract to build the second increment of the DCGS system.

Palantir ’ s suit claims the Army “ issued a solicitation that makes it impossible for Palantir to compete for the new DCGS contract. ” The firm also asserts that the Army for years covered up and falsified data that would have portrayed the company ’ s software favorably over DCGS. Palantir has hired the same legal team used by SpaceX, according to court documents.

Palantir brought the lawsuit against the Army after losing a protest with the Government Accountability Office. The company contends the Army should be using a “ phased approach ” that would allow providers of existing commercial software to bid for prime contracts for certain aspects of the larger system, rather than having one prime contractor be the architect of the system.

But the lawsuit is sure to be a battle as the Army, in a new report to Congress this week, reaffirmed its plan to use a single vendor as the “ system architect, developer and integrator, ” with other contractors that could bid to sell software. In the report ’ s appendix, the Army lists commercial software products that could satisfy certain requirements of the larger system, but does not mention Palantir or its Gotham software.

While the lawsuit makes its way through the court system, Palantir is keeping up the momentum. In the first two quarters of 2016 , Palantir has spent $530,000 on four lobbying firms to sway Congress and the Pentagon in its favor.

The defense industry consultant who works for a Palantir competitor marveled at the firm ’ s effectiveness.

“Palantir knew what they wanted at the beginning of the year and lined up members to support them in case the other side came in to try to reverse it or offer an amendment to kill it, ” the consultant said.