WASHINGTON — The US Army has selected two companies to enter exclusive negotiations for commercial hyperscale data centers on Army installations as part of its Enhanced Use Lease program, the service announced today.
Investment firm Carlyle was chosen for a project at Fort Bliss in Texas and portfolio company CyrusOne will work at Dugway Proving Ground in Utah.
“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,” David Fitzgerald, who is performing the duties of deputy undersecretary of the Army, said in the release. “Our new data center initiatives made possible by enhanced use leasing, are a direct investment in Army priorities.”
Under the Army’s Enhanced Use Lease authority, the service can lease non-excess property to private partners for either cash or services in return, using underutilized installation real estate to generate revenue or capabilities that benefit the Army. As Breaking Defense previously reported, Fitzgerald explained that the plan is to “supplement” traditional government funding with strategic capital so such ventures are self-sustaining without relying on the Army as “the sole source of return on investment” or relying on tax payer dollars for new construction.
“We’ve talked to probably 50 different companies that do everything from those data centers, to distribution operations to storage,” Lt. Gen. Christopher Mohan, commanding general of Army Materiel Command, told Breaking Defense Wednesday at the Global Force conference. “So we have agreements and public-private partnerships with companies that store stuff in excess warehouses or ammunition bunkers, because they get a secure storage location, a temperature controlled environment, and so those mechanisms are already in place.”
Today’s announcement comes just weeks after the Army announced a new “modernization strategy” inviting private equity firms to invest in the service’s installations, tech initiatives and broader industrial base as part of a larger strategy. Fitzgerald previously stated the Army is looking to sign its first leasing agreement by July 1, with agreements on a rolling basis.
These agreements are not yet final, but if completed, the companies would be responsible for all costs and operations in relation to the projects.