Britain's publicly owned National Energy System Operator (NESO) has awarded US tech firm Palantir a £21.2 million direct contract without competitive bidding. The contract, running from September 2026 to July 2027, secures licensing and support for critical energy processes on Palantir's Foundry platform. NESO justified the non-competitive award by citing vendor lock-in, noting that migrating to a rival would carry significant delivery risks and costs. While NESO plans a competitive procurement for a replacement platform starting in 2027, critics point to similar patterns in the NHS where early non-competitive contracts allegedly gave Palantir an unfair advantage in subsequent major bids.
NESO Palantir direct award
- ▪Britain's National Energy System Operator awarded Palantir a £21.2 million contract including VAT without competitive bidding on September 8, 2026.
- ▪The National Energy System Operator's contract with Palantir covers licensing and support for two critical business processes, Connections and Skip Rates, running on Palantir's Foundry platform.
- ▪The original contract between Palantir and National Grid ESO began in March 2023 under private ownership but was not publicly disclosed at the time.
Vendor lock-in justification
- ▪The National Energy System Operator justified the direct award under Section 41 of the Procurement Act 2023 due to an absence of competition for technical reasons.
- ▪The National Energy System Operator stated that moving to another supplier is not possible without significant cost, resource commitment, and delivery risk, including data migration and staff retraining.
Contract extension provisions
- ▪The National Energy System Operator's contract contains a risk clause allowing modifications and timeline extensions if legacy data structures, security, or regulatory compliance issues impact the transition.
- ▪The National Energy System Operator's direct-award contract with Palantir runs from September 8, 2026, until July 31, 2027, with six-month extensions available until July 31, 2028.
Future competitive procurement
- ▪The proposed Strategic Enterprise Modelling Capability contract is expected to run from July 31, 2027, until July 2032, with a potential two-year extension.
- ▪The National Energy System Operator has initiated discussions with potential suppliers regarding a new Strategic Enterprise Modelling Capability platform to replace the Palantir system.
NHS Palantir comparison
- ▪The National Health Service maintained that its Federated Data Platform procurement process was fair and open despite Palantir's existing incumbency.
- ▪Critics argued that Palantir's prior non-competitive UK pandemic contracts, totaling £60 million, gave the company an unfair incumbency advantage when bidding for the £330 million NHS Federated Data Platform contract.
Debatable claims
- ▪NESO was justified in awarding Palantir a £21m contract without competitive bidding
- ▪Palantir's interim contracts give it an unfair advantage in bidding for future UK public tenders
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