Palantir Technologies (NASDAQ:PLTR) and Anduril Industries are facing scrutiny after an internal U.S. Army memo flagged “fundamental security” flaws in the modernization of the battlefield communications network they are helping to build, Reuters reported on Friday.

The Army’s chief technology officer warned in September that the prototype of the Next Generation Command and Control (NGC2) platform should be considered “very high risk” because adversaries could potentially gain “persistent undetectable access.”

The platform, developed by Anduril under a $100 million contract with support from Palantir, Microsoft (NASDAQ:MSFT), and smaller defense contractors, is designed to connect soldiers, sensors, vehicles, and commanders with real-time data.

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Palantir and Anduril, both led by Trump allies ...