The UK government has promised a different approach to tech procurement following the award of controversial contracts to Palantir. Speaking to MPs, science minister Patrick Vallance said that the government's deals with Palantir – which has large contracts with the NHS and the Ministry of Defence – would be done differently in the future, instead emphasising investment in UK technology and companies.
The statement came as scrutiny of the arrangements intensified. NHS England's public announcement in 2023 said the £330 million investment in the Federated Data Platform and associated services contract would last seven years. However, the official contract award notice said the contract was set at £182.2 million and would end in February 2027. That February 2027 date represents a critical review point when the government could exercise break clauses negotiated when the deal was struck.
Palantir signed a contract with NHS England in late 2023 under the previous Conservative government. But this created a dilemma for the Labour administration that took office in 2024. The government faced pressure to act decisively, yet also reluctance to abandon a deal its predecessor had made without clear justification. Vallance said: "I hope I have been clear in describing a very different way of doing contracts: putting British companies there and procuring innovation here."
When pressed on whether the government could exploit the contract break points, Committee member and Liberal Democrat MP Martin Wrigley said: "These are existing contracts with break points, so the break points must be exploited to move to UK solutions – sovereign solutions – otherwise we just continue doing the same stuff." Vallance responded: "We are not continuing. We are doing something very different."
Doctors have been told by their union, the British Medical Association, to limit engagement with the NHS FDP, MPs have called for an end to Palantir's involvement in the NHS, and legal and privacy campaign groups have highlighted risks that the system could be used by the Home Office and the police under a future government.
The broader concern is not merely political. Palantir began as a spy-tech firm with backing from the CIA and heavily supports the controversial US Immigration and Customs Enforcement agency. For civil servants managing NHS patient data, those associations have become difficult to defend.
The government's shift in stance reflects a wider strategic rethink. The government has launched a Sovereign AI Unit with £500 million funding to support "national champions" in AI. The government spends an estimated £14 billion per year on purchasing digital services. Recent announcements signal intent to use that purchasing power differently. Chancellor Rachel Reeves announced a £2.5 billion package for AI and quantum technologies, including a £500 million Sovereign AI Fund launching in April at Wayve to provide British AI companies with funding, compute, and support to scale domestically.
The governance picture at NHS England itself suggests urgency. Senior NHS England tech and data leaders during the Palantir procurement have moved on or are about to do so. Ming Tang was national director data and analytics during the pandemic, in the period when NHS England first employed Palantir under £60 million of contracts awarded without competition. She became chief data and analytics officer during the FDP procurement and is now interim CIO. She is set to leave in April. CTO Sonia Patel is also set to leave this month.
The practical impact remains unclear. Fewer than a quarter of England's 215 hospital trusts were actively using FDP by the end of 2024. This matters; a contract whose software adoption is so low is harder to defend. Yet exiting early carries costs. Breaking a commitment requires either finding a replacement supplier or absorbing the technical debt of transition.
The government's approach sits somewhere between candour and evasion. His Majesty's Treasury is currently reviewing DHSC digital investment plans. Officials acknowledge the deal is problematic; they signal intent to move differently. But they are not announcing an immediate exit. Instead, they are positioning the February 2027 review as a pivot point, a moment when the contract could change shape or end entirely if circumstances warrant.
Whether that happens depends partly on timing. Since the Labour government came into power in 2024, it has decided to abolish NHS England and merge its responsibilities with those of DHSC, which requires further legislation in Parliament, with a deadline of April 2027. That reorganisation will complicate any decision about the Palantir platform. A new structure offers cover for a change of direction. It also creates an opportunity for delay.
The Palantir episode illustrates a genuine tension in public procurement. Departments need access to advanced technology. American firms often have it. Yet concentrating sensitive data with US corporations creates dependencies that sit uneasily with claims of national sovereignty. The government's answer is to invest in domestic capacity, a strategy that makes sense in principle but takes years to bear fruit.
In the meantime, the NHS remains locked into a contract few of its staff trust and many of its patients would likely oppose if asked. The government can argue it inherited this mess; it cannot avoid responsibility for what happens next.