Palantir, the US-based data analytics firm, recently lost two significant UK government contracts due to concerns over procurement procedures and escalating costs. The company’s failure to secure renewal of a contract with the Metropolitan Police and the termination of its involvement in the Homes for Ukraine program have brought scrutiny to how Palantir operates within the public sector.
What happened
In May 2026, London Mayor Sadiq Khan blocked a £50 million contract between the Metropolitan Police and Palantir, citing violations of strict public procurement rules. The proposed contract marked a sharp increase—nearly 100 times higher—than the previous agreement of less than £500,000, yet the police failed to invite other vendors to tender, a breach of taxpayer-funded contract standards. Khan’s intervention prevented a substantial unilateral price hike that lacked competitive bidding.
Separately, Palantir’s contract for the Homes for Ukraine scheme was canceled after the Ministry of Housing, Communities and Local Government moved to an in-house model, saving millions of pounds. Palantir had initially provided services for free in 2022 to support housing refugees fleeing the conflict in Ukraine but raised the contract price to over £10 million within two years.
Palantir’s controversial approach to public sector contracts, sometimes offering services initially at zero cost to secure a foothold before demanding high fees, has drawn criticism. Gareth Rhys Williams, the UK government’s Chief Commercial Officer, publicly condemned this anti-competitive practice in 2023 as contrary to public procurement principles that require open competition.
The company also holds a £330 million contract for the NHS Federated Data Platform (FDP), which has attracted increasing scrutiny. Although NHS England and Palantir highlight improvements tied to the platform, some NHS trusts, such as Greater Manchester, have rejected the tools, citing better alternatives and questioning the claimed benefits. The British Medical Journal has reported that the FDP’s reported successes may be overstated and lack comparative data against other trusts.
Why it matters
These contract losses reveal growing UK government vigilance over the procurement process and cost transparency related to AI services from private firms. Palantir’s practices highlight ongoing challenges in balancing innovative data technologies with public sector accountability, fiscal responsibility, and fair competition.
The issues underline the need for rigorous oversight when public funds are committed to complex AI platforms—especially in critical sectors like policing and healthcare—where the promised benefits must be backed by clear evidence and cost-effectiveness.
Background
Founded with initial CIA funding, Palantir has long specialized in big data and surveillance tools for military and intelligence clients, including US Immigration and Customs Enforcement and the Israeli Defense Forces. The company’s business model often involves securing contracts by initially offering free or low-cost services before escalating charges, a strategy that has drawn criticism within UK public procurement circles.
Palantir also attracted early controversy with a secret £1 contract to run the NHS Covid-19 Datastore in 2020, which exposed the company’s commercial tactics in public health data management. Since then, its expanding footprint in UK public contracts has prompted renewed calls for transparency and value demonstration.
Sources
This article is based on reporting and publicly available information from the following source:
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