By Alex BallingallDeputy Ottawa Bureau Chief

OTTAWA — Defence Minister David McGuinty is standing by his department’s decision to sign a new contract with the American data giant Palantir, stating the deal is a “legitimate procurement” with the Canadian branch of the controversial company.

McGuinty was responding after the Star revealed the Department of Defence quietly inked a $3.7-million contract with Palantir, sparking concerns from some artificial intelligence experts who say the company’s track record and the philosophy of its chief executive raise questions as the federal government promises to pursue “data sovereignty” for digital services in the military.

“Palantir Canada is a Canadian company, subsidiary to Palantir global,” McGuinty said, referring to the parent company based in the United States that was co-founded by a tech billionaire with ties to U.S. President Donald Trump.

“It was a legitimate procurement and it’s moving forward,” McGuinty said, speaking to reporters at the CANSEC military industrial conference near the Ottawa airport on Wednesday.

The minister added that “we’ll look at this question of data sovereignty,” and stressed that the Carney government will direct its military spending as much as possible to companies that “build in Canada.”

The existence of the latest Palantir contract came in a trove of documents tabled in April in response to a question from a Conservative MP, who asked for a list of government contracts with AI companies since January 2023. It showed the Canadian military used a “call up” on an existing “supply arrangement” with Palantir for a “data integration and analytics platform subscription.” The contract was worth more than $3.7 million, with a timeline from June 2025 to June 2026.

Spokespeople for the Defence Department have not responded to questions about this contract since Monday, and told the Star on Wednesday that they were still working on an official written answer.

Palantir has also not responded to the Star’s inquiries this week.

It’s not clear whether the new contract is linked to an earlier agreement with Palantir from March 2020, earmarked last year in a separate tranche of at $14.4 million. The government also signed a contract worth almost $1 million with Palantir in 2019 for “information technology and telecommunications consultants,” according to an online federal database.

The company has been criticized by organizations like Amnesty International and the American Immigration Council, including for its work with U.S. Customs and Immigration Enforcement (ICE), the agency that has sent masked officers to rounded up alleged illegal immigrants under the Trump administration.

Its chief executive officer has also argued in a recent book about the alleged perils of “hollow pluralism” in Western countries and proclaimed Big Tech companies have a “moral obligation” to defend the United States, according to a summary that Palantir posted to social media in April.

Jennifer Evans, a principal at the consultancy and research firm PatternPulse AI, said the military’s use of Palantir is concerning because of a 2018 law in the U.S. that could compel companies to hand over data to the American government.

Ottawa began negotiations with the U.S. government for an agreement under that law in 2022, while the Carney government has pledged a strategy to establish “data sovereignty” and keep Canadian control over sensitive online information.