The Metropolitan Police has been blocked from signing a contract worth up to £50m with the US technology firm Palantir, after London's deputy mayor refused to approve the deal.
The Met had proposed a £25.3m contract with Palantir UK for 2026-27 to support criminal investigations and reforms aimed at improving the force's culture and standards. It included an optional one-year extension worth a further £24.8m.
But the Mayor's Office for Policing and Crime (MOPAC) said it was not satisfied the Met had adequately ensured or demonstrated value for money.
It also cited concerns around the firm's values and ethics, although legally this cannot influence a deal refusal.
The Met said the decision was "disappointing" as it "needed to use the best technology available".
Palantir said their software was already used by a number of police forces and helps to tackle serious corruption.
Palantir, founded by the US billionaire Peter Thiel, has faced criticism over its work with US Immigration and Customs Enforcement (ICE) and the Israeli military, prompting calls for public bodies to consider the ethics when awarding contracts.
A spokesperson for City Hall said "a broader question remains over whether a company's values and ethics should be considered during public procurement".
"The mayor believes Londoners would want public funding to go only to companies that share the city's values, but this is not currently possible under procurement law," they said.
"He is expected to raise the issue with the government in due course."
They added that there were wider concerns about public sector contracts that can lock buyers into a single supplier, with costs rising over time and few options to switch provider.
In a letter to the force sent on Wednesday, the deputy mayor for Policing and Crime, Kaya Comer-Schwartz, said the Met had failed to obtain approval from MOPAC for its procurement strategy, despite being specifically reminded of the requirement.
She described this as a "clear and serious breach" of the rules.
Comer-Schwartz said the Met had only seriously engaged with one potential supplier, Palantir, and had not adequately tested the market to establish whether the firm was the best or most economical provider.
She also raised concerns about cost. The contract's value had risen from an initial estimate of £15m - £25m a year to the top of that range following direct negotiations with Palantir, and she was not satisfied the Met could fund it without "unacceptable adverse impact" on other budgets.
Any Met investment above £500,000 must be signed off by MOPAC under rules designed to ensure compliance with legislation and provide independent oversight.
The cost of an earlier pilot project the Met carried out with Palantir fell below the £500,000 threshold and so did not require MOPAC review or approval.
She said she continued to support the Met procuring technology to improve its operations, and that MOPAC stood ready to work with the force on a new procurement process.
A Met Police spokesperson said the decision by MOPAC was "disappointing" as the force needed to "modernise and use the very best technology available".
They added: "We must be able to innovate at a faster rate than hostile states and organised criminals. For now, this decision prevents us using technology already available to the MOD, the NHS and other police forces.
"Like several government departments and police forces who already use Palantir, procurement was conducted using the government's Crown Commercial Services Framework. We have applied this process diligently at every stage.
"The Met's financial position is well known – in the year ahead we face a £125m funding shortfall. To help meet that deficit we face reducing our workforce by 1,150 posts. The technology we want to introduce is crucial to maintaining our service to London while shrinking for the third consecutive year.
"Failing to introduce new technology to address back-office processes and build our effectiveness is the opposite of value for money. The technology has shown it can save much more than it costs and that it can improve performance."
A spokesperson from Palantir said: "Palantir's proven software is already helping a number of police forces up and down the country to tackle crime.
"This includes helping to improve the enforcement of Clare's Law by identifying 1,000 women in Bedfordshire whose partners have a history of domestic violence in a single year, while bringing a criminal gang in Luton that had stolen £700,000 from cash machines to justice.
"In London, it has helped the Metropolitan Police to tackle serious corruption and criminality within its force.
"We are proud of that work and stand ready to further support law enforcement across the UK."
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