Army reaches conditional agreement with private industry for hyperscaled data centers

WASHINGTON - The U.S. Army has conditionally selected two companies to enter into exclusive negotiations to build and operate commercial hyperscaled data centers on two Army installations. The initiative demonstrates a model for industry relationships under the Army's Enhanced Use Lease program.

Global Investment Firm Carlyle (NASDAQ: CG) was selected for a project on about 1,384 acres at Fort Bliss, Texas, and CyrusOne, a portfolio company jointly held by funds managed by KKR and BlackRock, was selected for a project on approximately 1,201 acres at Dugway Proving Ground, Utah. The companies were chosen through a rigorous and competitive process and will be responsible for financing, building, operating, maintaining, and decommissioning the data centers on underutilized but non-excess Army land at no upfront cost to taxpayers.

"AI is a strategic asset for the Army," said Secretary of the Army Dan Driscoll. "It is a force multiplier, supports future transformation and requirements, keeps the Army ahead of our adversaries, and generates resiliency across the force. These data centers are a critical resource to support that strategic imperative."

This strategic effort, which aligns with the White House's 2025 executive order on Accelerating Federal Permitting of Data Center Infrastructure, is authorized by Title 10 U.S. Code § 2667, which allows military departments to lease non-excess property. Developers will build and operate comprehensive behind-the-meter power and water solutions, thereby guaranteeing operational continuity without burdening public systems.

"By partnering with the private sector to develop cutting-edge data centers on our installations, we are bolstering our national security, driving technological innovation, and building a more resilient and modern Army," said David R. Fitzgerald, Deputy Undersecretary of the Army. "Our new data center initiatives made possible by enhanced use leasing, are a direct investment in Army priorities."

The Army is rapidly advancing its data center initiative, with Initial Operating Capability (IOC) at Fort Bliss projected for Fiscal Year 2027, and IOC at Dugway Proving Ground projected for Fiscal Year 2029. The U.S. Army Corps of Engineers will play a key role in the projects' development, as they conduct lease negotiations and provide critical technical expertise, to include environmental review.

"Ensuring lethality through modernization is a fundamental mission of the U.S. Army Corps of Engineers," said Lt. Gen. Butch Graham, USACE commanding general. "We are leaning forward with our full spectrum of talent and expertise to support the Army's Data Center EUL program. By delivering these critical facilities on an accelerated timeline, we are not just building infrastructure; we are engineering a strategic competitive advantage for the Army and the Nation."

While the selection is a major milestone, the deal is not yet final. It allows the Army and our private industry partners to enter an exclusive negotiation period to finalize lease and other terms. The initiative will enhance computational capability for the warfighter, create a projected significant number of American jobs, and advance the Army's role as a key economic partner.

Insights From Our Partners:

"We are pleased to have been selected to enter exclusive negotiations with the U.S. Army on this initiative to advance next-generation digital infrastructure. With deep roots in Washington, D.C., Carlyle brings experience at the intersection of government and industry, along with a strong track record investing in and building large-scale energy and digital infrastructure. We look forward to engaging with the Army, as negotiations progress to deliver integrated solutions at scale."

• Ferris Hussein, Partner, Global Infrastructure at Carlyle

"We are honored to be selected by the U.S. Army to enter exclusive negotiations for the Dugway project. This represents a unique opportunity to support the Army's modernization objectives through a long-term, commercially driven development. We look forward to working collaboratively with the Army as this initiative progresses."

• Eric Schwartz, Chief Executive Officer of CyrusOne.

"U.S. leadership in the global AI race will be decided in large part by who can build the infrastructure fastest. We commend Secretary Driscoll and the Army for recognizing that and developing an innovative public-private model to accelerate it. Through CyrusOne, KKR brings together land, power, and development expertise in an integrated way that cuts through the complexity of large-scale digital infrastructure delivery. We are proud to offer that capability in service of the nation."

• Waldemar Szlezak, Global Head of Digital Infrastructure at KKR.

"We are proud to partner with the Army on this important initiative, bringing together our experience in digital infrastructure and innovation. This collaboration reflects a shared commitment to advancing technology solutions that help meet the demands of a continuously changing global landscape."

• Will Brilliant, Partner and Global Head of Digital Infrastructure at Global Infrastructure Partners (GIP), a part of BlackRock.

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