The U.S. Army’s artificial intelligence needs are ballooning, so the military branch has tapped two private equity giants to construct massive data centers on domestic bases.
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Carlyle Group was selected for a project on 1,384 acres at Fort Bliss in Texas, while KKR & Co. data center affiliate CyrusOne was tapped for a similar venture on 1,201 acres at the Dugway Proving Ground in Utah, according to a Thursday press release.
Army Secretary Dan Driscoll said more partnerships like this are in the works.
“We just have massive demands,” he said when announcing the initiative, Bloomberg reported. “This is the first of many, many projects that we hope to announce.”
The projects — expected to cost $2B each, the Financial Times reported — are planned for land the firms are leasing from the Army for 50 years. The military branch won’t be investing directly but will be entitled to a percentage of each facility's capacity.
The 2.5-to-3-gigawatt development at Fort Bliss, a suburb north of El Paso, will have its own on-site power generation and a closed water system to minimize the impact on nearby communities. It is expected to come online in fiscal year 2027, according to the announcement.
CyrusOne’s 1 GW project at Dugway, about 75 miles southwest of Salt Lake City, isn’t projected to deliver until FY 2029.
The Army's press release says “the deal is not yet final” and that it is now entering “an exclusive negotiation period” to finalize the leases and other terms.
Rural Texas has become an important hub for the data center sector. The western part of the Lone Star State saw nearly 3.4 GW developed between 2017 and this year, according to JLL data reported by Bisnow.
Abilene, a town about 200 miles west of Dallas, wasn’t on the industry’s radar in 2020, when Northern Virginia accounted for more than half of all the nation’s built and planned data center capacity. Now, the amount of data center capacity under development in Abilene is triple what exists in all of Northern Virginia, largely due to OpenAI's Stargate project.
The Pentagon's cyber budget is $15B for 2026, a 4% increase from 2025.
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