The UK’s state-owned electricity system operator, National Energy System Operator (Neso), awarded US software firm Palantir a £21 million ($28.3m) contract, without inviting rival bids.

According to reporting by the Financial Times, Neso rationalized the decision, arguing that its critical grid processes now rely too heavily on Palantir’s technology to run a competitive procurement process.

Neso first partnered with Palantir in March 2023 to utilize its Foundry software to support data management. It subsequently extended the contract last month, with the new agreement covering the maintenance of critical operations on Palantir Foundry.

Palantir Foundry is a data integration and operations platform that Neso uses to manage critical electricity grid processes like connections and system balancing. Neso primarily uses the system to manage data and workflows for connecting new renewable energy projects, battery storage, and consumers to the electricity transmission network.

The latest contract is expected to last for between ten and 22 months. Neso said the original Palantir contract was not formally disclosed because it was not a public body at the time the deal was agreed.

Neso said it did not invite rival bids for “technical reasons” and cited a legal exemption that removes the requirement to consider other bids when there is no reasonable alternative to existing dependencies. Neso added that it would open up areas covered by the contract to other bidders at a later stage.

Palantir has come under growing scrutiny within the UK. The firm has signed several public-sector contracts, including with NHS England and the Ministry of Defence.

In May of this year, however, London mayor Sadiq Khan blocked a £50m ($67.5m) deal between the Metropolitan Police and Palantir, citing a “clear and serious breach” of procurement rules, arguing that the Met Police had failed to submit a proper procurement strategy and had exclusively considered Palantir without a competitive bidding process. Following the decision, Palantir issued legal proceedings against the Mayor’s Office for Policing and Crime.

Palantir was launched in 2003 by Peter Thiel and builds software to help organizations create and run artificial intelligence across private and public networks. An early investor in the company was the CIA through its venture capital branch, In-Q-Tel.

The company is known to serve police forces, immigration departments, and various militaries. Its work with the likes of ICE in the US and the Israel Defense Ministry has drawn criticism, as have its collaborations with police forces on surveillance programs.