Alex Karp, Palmer Luckey and the Pentagon’s New Defense-Tech Order
Observer ·
Alex Karp’s Palantir and Palmer Luckey’s Anduril hold Army agreements worth up to $30 billion combined. New October contracts are expanding Anduril’s Pentagon business, even as fiscal 2027 begins under a temporary spending bill.
Palantir takes its name from Tolkien’s seeing stones. Anduril chose Aragorn’s reforged sword. Alex Karp ’s company made its name in data integration and battlefield software, while Palmer Luckey ’s combines software with autonomous hardware, drones and weapons systems. The Pentagon, it turns out, has found plenty to buy from companies that borrowed their names from fantasy literature.
The Tolkien lineage runs through the companies themselves. Brian Schimpf , Anduril’s co-founder and chief executive, previously ran engineering at Palantir before joining Luckey’s startup. Luckey has said that Anduril’s five co-founders were avid Lord of the Rings fans, though none as fervent as he; Luckey keeps a collector’s version of Andúril hanging on his wall. The two companies now hold separate Army contracts with a combined ceiling of $30 billion.
Palantir’s agreement runs for as long as 10 years and is capped at $10 billion. Anduril’s , signed in March, is a separate 10-year vehicle capped at $20 billion .
The Army describes Palantir’s $10 billion as a maximum potential value, “not any specific obligations or commitments.” Matthew Steckman , Anduril’s president, put the distinction more bluntly after his company’s deal was announced in March: “There’s no money attached to it, this is just a contract vehicle.”
The federal fiscal year ended Wednesday, Sept. 30, closing the window to obligate some of the money Congress made available for fiscal 2026. A study of federal procurement from 2004 through 2009 found that 16.5 percent of annual contract spending occurred in the final month and 8.7 percent in the final week—4.9 times the average weekly pace. The same study found that federal information-technology projects contracted in that final week also received substantially lower quality ratings.
Not every Pentagon account expired at midnight. Money appropriated for a single year generally cannot take on new obligations after its period of availability ends, while procurement and research funding can remain available for several years.
The Army says the enterprise agreements are meant to make that buying process faster and cheaper. Palantir’s consolidated 75 contracts into one framework; Anduril’s replaced more than 120 separate procurement actions.
Defense Secretary Pete Hegseth pushed the department to accelerate drone procurement in a July 10, 2025 memo , calling drones “the biggest battlefield innovation in a generation.”
Karp’s company entered fiscal 2026 with its Army agreement already in place. Signed July 31, 2025 , two months before the fiscal year began, it allows the Army and other Defense Department agencies to buy Palantir products for as long as 10 years, subject to the $10 billion ceiling.
Orders placed against the agreement since Oct. 1 count toward the fiscal 2026 tally, and two large ones arrived this month. On Aug. 31, the Army moved the Tactical Intelligence Targeting Access Node (TITAN) into production with two delivery orders totaling $192 million . Palantir received $127 million as the prime contractor and Anduril $65 million for its portion of the first eight production systems .
Separately, on Sept. 17, the Army announced another $48.1 million award to Palantir for software that will replace nine legacy ammunition-management systems. The competition ran through three phases and finished in six weeks .
For the three months ending June 30, Palantir reported $809 million in U.S. government revenue, up 90 percent from a year earlier. That figure includes government customers outside the Pentagon and measures revenue recognized by Palantir, not Defense Department obligations during the fiscal year. Karp told CNBC on Aug. 3 that the growth “looks like this is going to go on for at least another 18 months.”
Luckey doesn’t look like the head of a traditional defense contractor. NPR once followed him around Anduril’s base while he was decked out in khaki shorts, flip-flops and what he proudly identified as a Dungeons & Dragons Hawaiian shirt. But don’t judge a book by its cover—just use it for branding inspiration—because a little more than a decade later, Luckey made his first fortune selling virtual reality startup Oculus to Facebook for about $2 billion.
His next company now holds an Army contract worth as much as $20 billion.
The first order under the new vehicle arrived three days after the Army announced it: $87.7 million for Anduril’s Lattice software and related integration, training and technical support for the military’s joint counter-drone task force.
In June, the Air Force entered the first production phase of its Collaborative Combat Aircraft program for 150 aircraft across Anduril’s FQ-44 Fury and General Atomics’ FQ-42 Vengeance . On Sept. 14, Air Force Secretary Troy Meink said the service intends to have at least 500 combat-ready aircraft in service by 2032, toward an eventual fleet of about 1,000.
Luckey’s company began building the Fury at Arsenal-1 i n Ohio in March , three months ahead of its original July target. The first Ohio-built Fury rolled off the line on July 27, just 557 days after Anduril announced the Pickaway County project . In its current configuration, the 5 million-square-foot complex can build up to 150 aircraft a year.
Anduril has committed $910.5 million in capital investment and 4,008 production and service jobs in Ohio by 2035.
The company is now expanding into submarine manufacturing. On Oct. 6, Anduril announced Arsenal-2 , a new shipyard at Sparrows Point, Maryland, backed by $3.7 billion in planned private investment. The Navy has awarded Anduril a contract worth up to $2.9 billion to manufacture components for Virginia-class nuclear submarines, with payments tied to production milestones. The facility is expected to begin operations in 2030 and create more than 3,100 jobs.
Both contracts were announced after fiscal 2027 began on Oct. 1, but neither announcement specified how much the Pentagon has obligated under them for the new fiscal year.
A continuing resolution signed Sept. 2 funds federal agencies through Dec. 11, avoiding a government shutdown when fiscal 2027 begins. It does not give the Pentagon a full-year defense budget, and stopgap funding generally limits new program starts and increases in production rates unless Congress makes an exception.
Anduril was already assembling Fury prototypes and buying long-lead parts at Arsenal-1, but company officials said they could not begin work under the Air Force production contract until Congress supplied fiscal 2027 procurement money. “Even a company like ours can only do so much without procurement dollars,” Erin Simpson , Anduril’s vice president for strategy execution, told reporters at the Air, Space & Cyber Conference last month.