Palantir (NYSE:PLTR) stock is in focus following the publication of a Financial Times piece detailing a National Audit Office (NAO) report. The NAO, a U.K. public spending watchdog, believes that Palantir was awarded a Homes for Ukraine contract with no competition in mind.
The watchdog noted that the U.K. government awarded Palantir the contract hastily and without conducting its normal “competitive procurement process.” This may have been done in order to quickly support the 100,000-plus refugees leaving Ukraine, which has been battered by the Ukraine-Russia war. In addition, Palantir was already included in the United Kingdom’s list of approved government providers.
Palantir first provided the government with an information technology (IT) system to support the Homes for Ukraine initiative at no cost for six months. In September 2022, Palantir was awarded a one-year contract for £4.5 million (or $5.49 million).
PLTR Stock: National Audit Office Calls Out Palantir for Uncompetitive Practice
The contract was reportedly noticed by the U.K government’s Chief Commercial Officer, Gareth Rhys Williams. In a letter to the company, Williams highlighted “his concern about the practice of offering services to public sector customers for a zero or nominal cost to gain a commercial foothold, contrary to the principles of public procurement which usually require open competition.”
According to the NAO report, some users also found Palantir’s software difficult to maneuver and complained that not enough tests were done on it. Meanwhile, the Department for Levelling Up, Housing and Communities admitted that it had “prioritised delivery over finding an optimal value provider.”
Still, the U.K government has decided to keep using Palantir’s software for the Homes for Ukraine program. This may be attributed to switching and implementation costs as well as “potential quality issues.” Last month, Palantir was awarded a one-year £5.5 million (or $6.71 million) contract extension for its services.
Palantir has already responded to the situation, stating that “the urgency of the situation meant that time was of the essence” and that there is “nothing unusual in a business offering a prospective customer the opportunity to trial before purchase.” The company also stated that its contract was extended in order to protect against a gap in service and to continue to provide support to Ukrainian refugees.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
