Carlyle and KKR secure a $4 billion order from the U.S. Army: to build two large-scale data centers at military bases

As conflicts in the Middle East continue, the U.S. Army’s use of artificial intelligence has surged. The U.S. Army has selected private equity giants Carlyle Group and KKR to build data centers at two military bases, each with an estimated investment of about $2 billion. This arrangement marks a new step in the Trump administration’s push to deepen ties with the private capital industry, which has a scale of $13 trillion.

On March 26, according to the Financial Times, U.S. Army Secretary Christine Wormuth stated that the Iran conflict highlights an urgent need for data centers — in recent weeks, the Army’s data processed on AI platforms has increased eightfold. Under the cooperation agreement, private equity firms will receive long-term leases on military bases, responsible for building and operating related facilities. The Army will not directly invest but will gain a certain proportion of dedicated computing power for the data centers.

Reports indicate that both sides are still in negotiations and have not signed a final agreement. Deputy Army Secretary Dov S. F. G. Fitzgerald revealed that the Army’s annual expenditure on data center usage has already reached hundreds of millions of dollars, and future demand is expected to grow further with the proliferation of AI and drone warfare technologies.

Two Data Centers to Be Built in Texas and Utah

According to the agreement, Carlyle will build a data center with a capacity of 2.5 to 3 gigawatts on approximately 1,384 acres of land at the El Paso Army Base in Texas. The project is expected to start operations in 2027 with an initial capacity of 200 MW and reach full operation by 2028.

KKR will leverage its joint investment portfolio company CyrusOne, co-owned with BlackRock, to build a 1 GW data center on about 1,201 acres at Dugway Proving Ground in Utah, with official operation expected in 2029. KKR is one of the world’s largest data center owners.

Under the agreement, the Army will receive a certain proportion of exclusive computing power from both data centers, while the remaining capacity will be sold to commercial clients by Carlyle and KKR, forming a dual-use military-civilian operational model.

AI-Driven Military Infrastructure Transformation, Army Data Center Plans Long in the Making

Explaining the background of this cooperation, Wormuth emphasized that the role of AI in modern warfare is rapidly expanding. She pointed out, “When soldiers face threats from the air and missiles from all directions, our needs are enormous,” and the computing power required for drone swarms and launching attacks “requires a different set of infrastructure.”

Although the Iran conflict has accelerated this demand, Wormuth specifically noted that the infrastructure cooperation plans were conceived before the outbreak of hostilities.

Meanwhile, the Pentagon is currently in dispute with AI company Anthropic over terms for using its models. Anthropic’s Claude model is among the earliest AI models known to be used in confidential operations, and OpenAI signed a contract with the Department of Defense earlier this month.

Beyond Data Centers: Army-Private Equity Collaboration Expands

Fitzgerald stated that this cooperation model could be replicated in other areas of the Army. He suggested that the Army might establish investment vehicles to jointly invest with private capital in mining operations, then transport minerals to military bases for processing, ultimately for manufacturing weapon components.

This statement indicates that the boundaries of public-private partnerships are expanding far beyond data centers. Both Fitzgerald and Wormuth said they expect the Army to complete more similar deals.

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