It had chosen a facility outside the ACT of 1000-plus square metres, Defence chief technology officer Matt Yannopoulos told The Australian.
The contract - for an undisclosed sum - is for five years, with a five-year extension option, Yannopoulos said.
Defence has about 200 data centres and server rooms spread across seven locations.
Over the years it had endured several data centre problems and was in needed more space.
Yannopoulos said Defence had a late 2013 or early 2014 target to realise its vision of reducing the number to "under 10 facilities" as foreshadowed in the 2009 White Paper.
"I always say our intention is to go to less than 10, fundamentally because of the secret nature of the infrastructure," Yannopoulos said.
Defence hopes to save $417 million over the next 10 years through the data centre consolidation program.
Last year it was given the green light to look for an interim solution, using a panel established by the federal government.
The panel members consist of Polaris, Global Switch, Fujitsu, Canberra Data Centres and Harbour MSP.
Defence selected two companies from the list and invited them to participate in the process.
"I can confirm we are nearly finalised on our negotiations through the interim data centre panel . . . we sought 1000-plus square metres," he said.
"We wrote to two of the panellists setting out our requirements."
He declined to disclose their identities or the value of the contract.
The Australian speculates that it could be a two-horse race between Polaris, based at Springfield, Queensland, and Sydney's Global Switch, which already counts the Australian Taxation Office as a client.