The US Army data centers represent a significant shift in how the military acquires critical AI infrastructure. The Army has reached conditional agreements with private investment firms Carlyle and CyrusOne to develop hyperscale data centers on underutilized land at Fort Bliss (Texas) and Dugway Proving Ground (Utah), with two additional bases—Fort Hood (Texas) and Fort Bragg (North Carolina)—expected to host similar projects.
Key Takeaways
- Carlyle selected for ~1,384 acres at Fort Bliss; CyrusOne for ~1,201 acres at Dugway Proving Ground.
- Each project estimated at ~$2 billion, fully financed by companies; zero upfront taxpayer cost.
- Fort Bliss data center targeted for Initial Operating Capability in Fiscal Year 2027; Dugway in FY2029.
- Leases up to 50 years; companies handle design, permitting, construction, utilities, and operations.
- First Enhanced Use Lease for data centers on Army installations; competitive process among private and public entities.
Why the Army is betting on private data centers
The US Army data centers initiative directly supports the military’s AI transformation strategy. According to Secretary of the Army Dan Driscoll, AI functions as a strategic force multiplier that supports future transformation, maintains technological advantage over adversaries, and builds resilience across the force. Rather than building and operating data centers itself—a capital-intensive endeavor—the Army is leveraging private sector expertise and financing through Enhanced Use Lease (EUL) authority, which permits federal agencies to lease underutilized property to private entities for up to 50 years.
The conditional agreements announced in March 2026 represent the outcome of a competitive process. Over a dozen companies pitched proposals in response to an RFP issued in January 2026, with bids due February 23. The Army Corps of Engineers is handling final lease negotiations, environmental reviews, and technical oversight. First leasing agreements are targeted for execution by July 1, 2026, on a rolling basis.
How the US Army data centers projects are structured
Carlyle, a global investment firm listed on NASDAQ as CG, secured the Fort Bliss opportunity comprising approximately 1,384 acres. CyrusOne, a portfolio company of KKR and BlackRock funds, was selected for roughly 1,201 acres at Dugway Proving Ground. Each project carries an estimated cost of approximately $2 billion, with companies fully financing development, design, permitting, construction, utilities, roads, parking, fencing, police and fire protection, maintenance, operations, and eventual decommissioning.
The Fort Bliss acreage was reduced from the original proposal due to cultural and environmental considerations, demonstrating that the Army is balancing national security needs with stewardship of installation resources. Water efficiency is a priority across all projects; proposers were required to include detailed plans for cooling IT equipment and energy infrastructure. This reflects broader federal concerns about data center energy consumption and water use as AI infrastructure scales nationally.
Competitive context and the broader federal AI push
The Army’s approach differs from traditional military procurement. By opening installations to competitive bidding among private, public, and not-for-profit entities, the Army taps private capital and operational expertise without direct government expenditure. This model aligns with Trump’s 2025 executive order to accelerate federal permitting of data center infrastructure on underutilized federal land, which revoked a prior Biden administration order restricting such leases.
The Army is pursuing complementary infrastructure partnerships as well. Beyond data centers, the military is exploring nuclear microreactors on installations to power energy-intensive operations. These initiatives collectively position the Army to meet surging AI compute demands while preserving capital for operational priorities.
What happens after conditional agreements?
Conditional agreements are not final leases. The Army Corps of Engineers must complete environmental reviews, technical assessments, and final lease negotiations before execution. Companies will then begin design and permitting phases, with Fort Bliss targeting Initial Operating Capability in FY2027 and Dugway in FY2029. Fort Hood and Fort Bragg remain in earlier stages; the Army issued the RFP in January 2026 with the expectation that additional sites would be developed on a rolling basis.
Once operational, these data centers will serve as critical infrastructure for Army AI applications, from logistics optimization to autonomous systems. The 50-year lease terms, with potential renewal, reflect the long-term nature of data center infrastructure investment and the Army’s confidence in sustained AI demand.
Is the US Army data centers initiative taxpayer-funded?
No. Each project is fully financed by the selected company—Carlyle and CyrusOne are responsible for all design, construction, and operational costs estimated at approximately $2 billion per site. The Army receives lease revenue but incurs no upfront capital outlay.
How does this compare to other military real estate partnerships?
The Army has prior experience with public-private partnerships, including leasing storage facilities in warehouses and bunkers. However, this marks the first Enhanced Use Lease specifically for data center development on Army installations, making it a novel application of EUL authority for AI infrastructure.
When will these data centers be operational?
Fort Bliss is targeted for Initial Operating Capability in Fiscal Year 2027, while Dugway Proving Ground is projected for FY2029. Final leasing agreements are targeted for execution by July 1, 2026.
The US Army data centers initiative signals a pragmatic shift in military infrastructure strategy. Rather than competing with private cloud providers for compute resources or building proprietary facilities, the Army is leveraging private capital and expertise to acquire AI infrastructure at scale. If executed successfully, this model could reshape how the Department of Defense acquires and operates technology infrastructure across installations worldwide.
Edited by the All Things Geek team.
Source: TechRadar
