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Palantir and Andoril, two of the largest US defense technology companies, are in talks with about a dozen rival companies to form a consortium that will jointly bid for US government business in an attempt to disrupt the oligopoly of the country's “prime” contractors.
The consortium plans to announce as early as January that it has reached agreements with a number of technology groups. Companies in talks to join include Elon Musk's SpaceX, ChatGPT maker OpenAI, autonomous shipbuilder Saronic, and artificial intelligence data group Scale AI, according to several people familiar with the matter.
“We are working together to provide a new generation of defense contractors,” said one of the people involved in developing the group.
This step comes as… Technology companies The United States is seeking to wrest a larger slice of the US government's massive $850 billion defense budget from traditional prime contractors such as Lockheed Martin, Raytheon and Boeing.
The consortium will combine the weight of some of Silicon Valley's most valuable companies and leverage their products to provide a more efficient way to provide the U.S. government with advanced defense and weapons capabilities, according to another person involved.
Comes as Defense technology startups They have attracted record amounts of funding this year, with investors betting they will be among the winners of increased federal spending on national security, immigration and space exploration under Donald Trump's incoming administration.
Wars in Ukraine and the Middle East and geopolitical tensions between the United States and China have increased the government's reliance on technology companies developing advanced artificial intelligence products that can be used for military purposes, and have encouraged investors into the sector.
Palantir's stock price has risen 300 percent in the past year, giving the company a market value of $169 billion — larger than Lockheed Martin. The data intelligence group was co-founded by technology investor Peter Thiel, who also provided initial backing for Anduril, which launched in 2017 and was valued this year at $14 billion.
Meanwhile, SpaceX was valued at $350 billion this month, making it the world's largest private startup, and OpenAI's value has risen to $157 billion since its founding in 2015.
Each company tried to grab a slice of the government's defense budget. While SpaceX and Palantir have won large public contracts going back a couple of decades, some are more recent in government procurement. OpenAI updated its terms of service this year to no longer explicitly prohibit the use of its AI tools for military purposes.
US defense procurement has long been criticized as slow and uncompetitive, favoring a small number of decades-old blue-chip companies, such as Lockheed Martin, Raytheon and Boeing. These huge conglomerates typically produce ships, tanks and aircraft that are expensive and take years to design and manufacture.
Silicon Valley's booming defense industry has prioritized producing smaller, cheaper, autonomous weapons that it claims will better protect the United States and its allies in a modern conflict.
One person involved in developing the consortium described it as “industry alignment” to “execute DoD technical priorities” and “solve critical issues related to software capabilities.”
Some linkages between the technology groups expected to be in the consortium have already been agreed and integration work will begin immediately.
This month, Palantir's “AI Platform,” which provides cloud data processing, was integrated with Anduril's standalone software, “Lattice,” to deliver AI for national security purposes.
Likewise, Anduril has integrated its anti-drone defense systems with advanced AI models from OpenAI to jointly work on US government contracts related to “aerial threats.”
A joint statement from Anduril and OpenAI about the partnership said it “aims to ensure that the US Department of Defense and the intelligence community have access to the most advanced, effective, and secure AI-based technologies available in the world.”
Anduril, OpenAI and Scale AI declined to comment on the consortium's development. Palantir, SpaceX and Saronic did not respond to requests for comment.
