Palantir urges GSA to withdraw draft LLM acquisition rule
Palantir's legal argument that GSA lacks independent authority under the major questions doctrine is one no other contractor has been willing to make publicly, even as they urge substantial revisions.
TL;DR
Palantir has called on GSA to withdraw its draft large language model acquisition rule entirely, arguing through law firm Freshfields that the agency lacks independent authority to finalize it and that the proposed clause would violate the Federal Acquisition Streamlining Act. The company warned the rule would push agencies toward non-GSA contract vehicles, undermining the administration's procurement consolidation goals. Palantir's position stands alone: a Nextgov/FCW review of public comments shows the rest of industry (including CCSGP, BSA, PSC, and ITI) is focused on narrowing scope and clarifying definitions, not killing the rule.
Palantir's submission, filed by Freshfields, argues the proposed clause exceeds GSA's statutory authority under the major questions doctrine, that's the principle that agencies can't regulate matters of "vast economic and political significance" without clear congressional delegation. "Congress did not grant GSA the authority to deviate from the commercial market for AI solutions in this way," the letter states, adding that the clause would violate FASA's requirement that procurement rules not exceed standard commercial practices.
The defense contracting conflict
Palantir also argues the rule is incompatible with defense acquisition law, which limits the clauses agencies can impose and prohibits demanding proprietary IP rights as a condition of award. The company's position is that the draft rule disregards decades of IP precedent and would force it to choose between protecting intellectual property and selling through GSA schedules.
Where everyone else is
A Nextgov/FCW review of roughly a dozen public comments on regulations.gov shows the rest of industry negotiating at the margins. The Coalition for Common Sense in Government Procurement asked GSA to limit the rule's reach to data submitted directly to an LLM's inference engine, not upstream or downstream processing. The Software & Information Industry Association, Business Software Alliance, Professional Services Council, and ITI Council each urged GSA to clarify scope and flowdown requirements. No other commenter joined Palantir's call for outright withdrawal.
Palantir's Menaka Kalaskar previewed much of this position at GSA's July listening session but stopped short of demanding withdrawal at the time. The formal comment raises the stakes: if GSA proceeds despite Palantir's objections, the company signals it'll route government AI business through non-GSA vehicles, fragmenting the very procurement base the administration wants to consolidate.
Published ·Deep Fathom