Pentagon Leases Military Land for Commercial AI Data Centers

The U.S. military is opening the gates to commercial AI infrastructure on a scale never before attempted, with at least a dozen Army and Air Force installations now offering land to private data center developers in exchange for computing capacity.

Two deals have already been conditionally awarded. Carlyle Group secured roughly 1,384 acres at Fort Bliss, Texas, while CyrusOne—jointly owned by KKR and BlackRock—won rights to approximately 1,201 acres at Dugway Proving Ground in Utah, the Army's primary chemical and biological weapons testing site. Each project carries an estimated $2 billion price tag, according to the Financial Times.

Army Secretary Dan Driscoll called the Fort Bliss facility "the first hyper-scale data center that the Pentagon has ever done," telling the Wall Street Journal that AI represents "a strategic asset" and "force multiplier" for the service. The arrangements run through the Army's Enhanced Use Lease program, driven by a Trump administration executive order directing federal agencies to open non-excess land for data center development.

Why it matters

This marks a fundamental shift in how the Defense Department acquires computing infrastructure. Rather than building and operating facilities directly, the military is trading land access for processing power—offloading construction costs while potentially exposing installations and nearby communities to the resource demands that have sparked civilian opposition to data centers nationwide. Nearly $156 billion in U.S. data center projects have been delayed or canceled due to local pushback, according to Data Center Watch.

Beyond Texas and Utah

The Army is also considering sites at Fort Hood, Texas, and Fort Bragg, North Carolina. The Air Force issued solicitations for Arnold Air Force Base in Tennessee, Edwards Air Force Base in California, Joint Base McGuire-Dix-Lakehurst in New Jersey, Davis-Monthan Air Force Base in Arizona, and Robins Air Force Base in Georgia. More recently, it sought proposals for Joint Base Elmendorf-Richardson, Eielson Air Force Base, and Clear Space Force Station in Alaska.

Some locations sit close to civilian populations. Contracting documents show the Army evaluating a Fort Hood parcel within half a mile of residential and commercial property, and several Fort Bragg sites within one mile of civilian areas.

Water and power constraints

Both awarded projects require net-zero water usage and independent power generation that doesn't draw from local electrical grids—requirements that don't apply to commercial facilities built off-base. The Defense Department's own procurement documents rate water risk for the El Paso area surrounding Fort Bliss as "Extremely High."

Col. John Oliver, executive officer for Deputy Army Under Secretary Dave Fitzgerald, told Defense One the Army is encouraging Carlyle to drill a new well feeding El Paso's desalination plant to offset the data center's water consumption. "We are encouraging Carlyle to do that, so actually make it net-positive," Oliver said, though he acknowledged the engineering solution remains unproven.

A Virginia state study found that residents' monthly energy bills could rise $14 to $37 by 2040 due to data center concentration in that state.

Congressional scrutiny

Rep. Cory Mills (R-FL) secured language in the House version of the fiscal 2027 defense authorization bill barring the Pentagon from leasing land for data centers unless developers exclude components from China, Russia, Iran, or North Korea. The Army objected, arguing the measure creates a "federal land penalty" that would discourage companies from building on secure military installations.

Rep. John Garamendi (D-CA) proposed requiring environmental and security impact assessments before finalizing deals, but House Armed Services Republicans rejected the amendment. Senate Republicans defeated a separate Democratic measure that would have blocked leasing until the Pentagon completes a comprehensive data center strategy.

Timeline and next steps

Initial operating capability at Fort Bliss is projected for fiscal 2027, with Dugway following in fiscal 2029. The U.S. Army Corps of Engineers is conducting environmental reviews at both sites. All other locations remain solicitations rather than commitments.

These details were first reported by Military.com.