Palantir has become a flashpoint in the European Commission's effort to rewrite the bloc's public‑procurement framework. The US data‑analytics firm, which supplies software to French intelligence, German police, Dutch defence agencies and the Spanish military, holds contracts worth at least £670 million (about €782 million) in the United Kingdom, half of them with the National Health Service. Yet its global effective corporate‑tax rate for 2025 was calculated at just 1.4 percent, creating a tax gap of roughly €12 million in Europe.

The disparity between the scale of public spending that Palantir enjoys and the tiny share of profit it contributes to European tax coffers has prompted unions, consumer groups and tax‑justice organisations to demand a tougher stance in the upcoming procurement reform.

Why procurement matters for workers and taxpayers

Public authorities across the EU purchase goods and services worth around €2.6 trillion each year, roughly 15 percent of the bloc's gross domestic product. That purchasing power can shape labour standards, environmental outcomes and the fiscal contribution of multinational suppliers. When contracts are awarded solely on the basis of price, the cheapest bid often wins even if it comes from a company that underpays staff, sidesteps tax obligations or relies on offshore data centres that jeopardise digital sovereignty.

Unions argue that the current system rewards exactly the opposite of the public interest. "When a hospital contracts a software platform that is cheap on paper but built by a firm that avoids taxes and pays its workers poorly, the real cost is borne by taxpayers and patients," said a spokesperson for the European Trade Union Confederation. "Public procurement should be a lever for decent jobs, fair wages and sustainable services, not a subsidy for profit‑maximising multinationals."

Draft changes: from cheapest price to best value

The leaked draft, expected to be published on 9 September, proposes that the "best price‑quality ratio" become the default criterion for awarding contracts. In practice this would require contracting authorities to set clear quality thresholds, covering labour conditions, environmental performance and data security, before evaluating bids on price.

Critics warn that the draft still leaves a loophole: authorities could define minimal quality standards and then revert to a pure price comparison. If the thresholds are set too low, the new rule would merely re‑brand the old system. Trade union representatives stress that quality must be defined in concrete terms, such as compliance with collective‑bargaining agreements, safe staffing ratios in hospitals, and demonstrable reductions in carbon emissions.

Beyond labour and environmental metrics, the proposal recognises strategic concerns about digital sovereignty. It flags the risk of dependence on a handful of non‑EU suppliers for cloud, AI and data‑analytics services, noting that foreign laws could compel disclosure of sensitive information. The draft therefore preserves the possibility for public bodies to retain services in‑house or to cooperate with other authorities without opening a competitive tender.

Tax‑avoidance provisions stripped back

Where the draft falls short, according to tax‑justice advocates, is its treatment of aggressive tax planning. The current rules allow public buyers to exclude firms that have not paid taxes legally. The new text, however, removes the explicit ground for barring companies that engage in aggressive tax avoidance, even if they remain technically compliant.

CICTAR, the Centre for International Corporate Tax Accountability and Research, has highlighted Palantir as a prime example. The firm structures its operations so that most of its profit is booked in the United States, where corporate tax rates are lower, while still securing lucrative public contracts across Europe. "Legality does not equal fairness," said a CICTAR analyst. "Public money should not subsidise companies that engineer their tax bills down to a fraction of their earnings."

Palantir is not alone. The think‑tank's research also points to Amazon, Microsoft, Oracle and Accenture as multinationals that routinely minimise European tax liabilities while winning large public contracts. The draft's omission of a tax‑transparency requirement, such as mandatory country‑by‑country reporting, is therefore seen as a missed opportunity to align procurement with the EU's broader agenda on tax justice.

Implications for European digital autonomy

Reliance on US‑based tech firms raises questions that go beyond fiscal fairness. France has already announced plans to replace Palantir in its domestic intelligence services, citing strategic dependency concerns. The Netherlands is pursuing a European alternative, and Switzerland rejected Palantir over fears that data could be accessed by US authorities.

Commission officials argue that the revised rules should help public bodies retain control over their systems and data, require algorithmic transparency and involve workers and trade unions in the procurement process. "When a police force or a hospital depends on a single foreign supplier, switching providers is not as simple as changing a stationery vendor," a senior EU official told a briefing. "The stakes involve national security, patient confidentiality and the integrity of public services."

By keeping the door open for in‑house provision and inter‑authority cooperation, the draft seeks to protect the capacity of European public entities to develop and maintain their own digital infrastructure. This aligns with the EU's ambition for strategic autonomy in emerging technologies, a goal that has gained urgency after the pandemic and the war in Ukraine highlighted supply‑chain vulnerabilities.

What the next steps could mean for workers and households

If the Commission adopts the draft, the €2.6 trillion of annual public spending could become a tool for raising labour standards across the continent. Companies that wish to win contracts would need to demonstrate compliance with collective‑bargaining agreements, provide fair wages and ensure safe working conditions throughout their supply chains.

For households, the impact could be indirect but significant. Higher standards in public procurement often translate into better‑quality services, from cleaner hospitals to more reliable public transport, and can help curb the race to the bottom on wages that depress living standards. Moreover, preventing tax avoidance by large contractors would increase the fiscal resources available for public investment, potentially easing pressure on social‑benefit budgets.

However, some business groups warn that stricter criteria could raise procurement costs and slow down the rollout of digital projects. They argue that a balanced approach is needed to avoid stifling innovation. "We support higher standards, but we must ensure that the rules do not become so burdensome that they deter firms from participating," said a spokesperson for the European Business Association.

The debate is likely to intensify in the European Parliament, where members from both the left‑wing S&D group and the centre‑right EPP have expressed concerns about the feasibility of enforcing detailed quality and tax‑transparency requirements. MEPs have also questioned whether the Commission has the capacity to monitor compliance across thousands of contracts.

Looking ahead

The final text of the procurement reform is expected to be presented before the end of the year, followed by a period of negotiation with the Council of Ministers and the European Parliament. If adopted, the new rules would apply from 2025, giving public authorities a few years to adapt their tendering processes.

For now, the case of Palantir serves as a cautionary tale about the limits of a procurement system that focuses solely on price. As the EU grapples with the twin challenges of fiscal fairness and digital sovereignty, the outcome of this legislative overhaul could reshape how public money is spent, how multinational firms operate in Europe and how workers across the continent experience the benefits, or the costs, of public procurement.