House NDAA provision could derail Army data center projects

An amendment in the House Armed Services Committee chairman’s mark for the fiscal year 2027 defense policy bill could discourage technology companies from building data centers on military installations, hindering Army modernization efforts and future private investment, an Army official said. 

The measure, offered by Rep. Cory Mills (R-Fla.), would bar the Defense Department from leasing its land to private companies to build data centers unless they agree not to install or operate data facility equipment that contains components manufactured in China, Russia, Iran or North Korea. 

The restriction would apply to certain printed circuit boards, advanced semiconductors, chipsets and other components that the Defense Department considers a national security risk. 

“Honored to pass this amendment to protect our military installations from Chinese components being used in data centers on our installations,” Mills said on social media platform X. “This bill protects national security, promotes American businesses, and builds industry capability.”  

Since the domestic industrial base does not yet produce some of the equipment needed for data centers, Army officials say the amendment would create a “federal land penalty” by imposing requirements on companies that build facilities on military installations that would not apply to similar projects built elsewhere.

“If a partner builds outside our gates, they don’t face these rules. If they build inside, they do. This unworkable standard will drive world-class commercial partners — and over $1.3 billion in private capital — away from Army land,” an Army official told Federal News Network. 

“Downstream, this means the Army loses access to resilient, co-located power and data infrastructure, forcing us to either fund these multi-billion-dollar modernizations with taxpayer money or fall behind our adversaries,” the Army official added.

The amendment comes as the Trump administration is accelerating AI data center development by allowing private companies to use federally owned land — the Army has already selected Carlyle Group Inc., one of the world’s largest private equity firms, to build a massive data center at Fort Bliss in Texas and CyrusOne, a company jointly owned by KKR and BlackRock, to develop a similar project at Dugway Proving Ground in Utah. The service is also pursuing additional data center projects at Fort Bragg, North Carolina, and Fort Hood, Texas. 

In return, the service would  gain access to some of the data center’s computing power to support its expanding use of artificial intelligence. The facilities will be fully commercially operated and allowed to sell excess computing power to its customers.

The Fort Bliss hyperscaled data center is expected to become operational in 2027. 

Similarly, the Department of the Air Force is opening up its unused land across five military bases to private companies to build AI centers.

The Army official said that lawmakers have been receptive to the service’s concerns. 

“We have shared our technical feedback on how this provision impacts our leasing authorities. The feedback we receive is generally supportive of our shared goal — securing our networks and supply chains,” the Army official said. “Lawmakers want to protect national security, just as we do. Our job is to help them understand when a well-intentioned policy might have the unintended consequence of halting our own modernization.”

The Army stopped short of calling for the provision to be removed entirely but said it wants Congress to adopt a policy that “secures our systems without hamstringing our partnerships.”

“We want Congress to incentivize technology companies to build on secure federal land, rather than creating barriers that drive them away. If a commercial business on federal land provides services to the government, they already fall under strict, existing federal security requirements,” the Army official said.

Mills’ office did not respond to a request for comment.

Rep. John Garamendi (D-Calif.) raised separate concerns about the military’s broader push to host commercial data centers that are “extraordinary consumers of both energy and water,” which could strain resources needed to support military operations. 

“We’re not opposed to data centers. We just want to make sure that if we’re going to put a data center on a federal facility, that federal facility is not going to be degraded by the data center,” Garamendi said. 

“What are the energy issues? What are the water issues as it applies to the base? Is there backup power, is there light, noise pollution that would harm the utility of that base? Is there encroachment on training and operations and the physical and supply chain of security?” he added.

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