Palantir Takes Over FAA Software Upgrades After DOGE Fails
Following failed reform efforts by the Department of Government Efficiency, Palantir is securing major FAA contracts to overhaul the nation's struggling air traffic control software.
The Federal Aviation Administration is pivoting to Peter Thiel's Palantir to overhaul its struggling air traffic control infrastructure after reform efforts by Elon Musk's Department of Government Efficiency faltered. While Musk's agency promised rapid upgrades, its primary action was terminating 400 FAA employees, including maintenance technicians across 18 air traffic control centers. Meanwhile, systemic issues led to 2025 becoming the worst year for flight delays in over a decade, with one in four flights disrupted—totaling nearly 1.7 million delays, cancellations, or diversions—and tarmac delays increasing by 64 percent compared to 2024.
To address these failures, the July 2025 One Big Beautiful Bill Act authorized $12.5 billion in supplemental funding, dedicating approximately $5 billion specifically for software upgrades. Palantir, which surpassed $1 billion in federal contracts in 2025 and is projected to exceed $1.5 billion in 2026, is poised to capture much of this funding. The company's Foundry data integration system has been used by the FAA since 2024. Palantir recently secured no-bid contracts for an AI-powered runway collision avoidance tool and an AI integration for the FAA's grants system, which funds up to 95 percent of improvements at small airports. It also won a contract to deploy its proprietary ontology-driven Foundry Operating System across the agency.
Although Palantir lost the FAA's $875 million SMART national airspace system contract to Air Space Intelligence—a startup staffed by Palantir alumni Dan Rickert, Steph Starsia, Connor Ryan, and Tate Krasner—its software remains deeply embedded. For aviation practitioners and air traffic controllers, however, software upgrades do not solve the severe staffing crisis. The FAA finished 2025 with 14,832 controllers but expects to lose 1,711 to attrition this year. Despite a $239 million hiring budget for 2026 and a gaming recruitment campaign that drew 2,000 applications, the FAA has lowered its staffing target from 14,633 to 12,563 active controllers, claiming AI will offset the shortage.
This is our own summary of reporting by The Verge AI
