Summary Yes, under the proposed Cloud and AI Development Act (CADA), contracting authorities may participate in Commission-led procurement activities either on their own behalf or as central purchasing bodies (CPBs), provided they qualify as such under Directive 2014/24/EU. As proposed in Article 37(2), specific rules and obligations may be imposed on these authorities when they act as CPBs within the procurement agreement established under Article 38. This mechanism enables national aggregation of demand, feeding into the Commission's broader procurement framework to leverage economies of scale for cloud and AI services while maintaining compliance with Union assurance levels.

Detail

The proposed CADA introduces a novel procurement architecture designed to aggregate demand for cloud computing services, data centre services, software, and AI systems across the Union. A cornerstone of this architecture is the flexibility granted to national contracting authorities regarding their role in these procedures, as outlined in Article 37.

Dual Capacity: Own Behalf or as CPBs

Article 37(2) explicitly states that contracting authorities may participate in the procurement procedures "on their own behalf, or as central purchasing bodies within the meaning of Article 2(1), point (16) of Directive 2014/24/EU, when they qualify as such." This dual capacity is a critical design feature, allowing Member States to align their participation with existing national legal frameworks. If a national authority already qualifies as a CPB under the transposition of the Public Procurement Directive, it can leverage that status within the CADA framework. This ensures that the proposal does not disrupt established national procurement structures but rather integrates them into a Union-level mechanism.

The Article 38 Agreement and Specific Rules

The proposal recognises that acting as a CPB carries distinct legal implications compared to acting as a standard contracting authority. Consequently, Article 37(2) specifies that "specific rules and obligations governing their participation may be imposed where they participate as central purchasing bodies in the agreement referred to in Article 38."

The agreement under Article 38 is the foundational instrument for this framework. It is negotiated between the Commission and at least two Member States and lays down the practical arrangements for procurement activities. Crucially, this agreement "constitutes a mandate for the Commission to procure on behalf of, or in the name of, the participating entities." When a contracting authority acts as a CPB within this agreement, it is subject to specific obligations that may differ from those of a standard participating entity. These rules are designed to manage the complexity of the CPB's role as an intermediary between the Commission and the downstream public bodies it serves.

National Aggregation and Demand Feeding

This provision supports a model where national contracting authorities can aggregate demand internally before engaging with the Commission's framework. By acting as CPBs, these authorities can pool resources from multiple subordinate public bodies, creating larger, more attractive lots for the Commission's procurement procedures. This aggregation is essential for achieving CADA's objective of harnessing collective purchasing power to secure favourable terms for cloud and AI services, which are often characterised by complex technical requirements and significant market concentration.

The mechanism effectively creates a "national feeding" structure: subordinate bodies report their needs to the national CPB, which then consolidates these requirements into a single participation in the Commission's dynamic purchasing system or framework agreement. This allows the Commission to negotiate at a Union scale while respecting national administrative hierarchies.

Legal Framework and Derogations

The participation of contracting authorities as CPBs operates within the broader derogations from the Financial Regulation of the Union (Regulation (EU, Euratom) 2024/2509) established by Article 37. This allows the Commission to use all procurement procedures available for the benefit of these authorities, including dynamic purchasing systems and framework contracts.

When a contracting authority acts as a CPB under this framework, it is considered a "participating entity." The agreement under Article 38 will detail the decision-making processes, evaluation of tenders, and award conditions. Importantly, Article 39 clarifies that a participating entity is deemed to have fulfilled its obligations under applicable Union public procurement law where it acquires supplies or services by means of contracts awarded by the Commission under this Chapter. However, the CPB must still ensure that the downstream allocation of these services to other public bodies complies with national law and the initial contractual provisions.

Obligations and Compliance

Contracting authorities acting as CPBs must adhere to the specific rules set out in the Article 38 agreement. These may include obligations related to:

  • Downstream Distribution: How the CPB manages the allocation of services to other public bodies within its jurisdiction.
  • Sovereignty Compliance: Ensuring that the services procured meet the relevant Union assurance levels determined by risk assessments under Article 29.
  • Transparency: Maintaining non-discriminatory conditions for the allocation of services to subordinate bodies.

While the Commission retains responsibility for the operation and management of the procurement activities (including the launch of procedures and the award of contracts), the CPB's role introduces an additional layer of national public procurement law considerations. The CPB acts as the bridge, ensuring that the Union-level procurement results are effectively translated into national service delivery.

What this means for you

For in-house counsel, procurement officers, and compliance teams, the ability for contracting authorities to act as CPBs under CADA introduces specific strategic and legal considerations:

  • Qualification Assessment: Verify whether your organisation qualifies as a central purchasing body under national law transposing Directive 2014/24/EU. This status is the prerequisite for participating under the specific rules of Article 37(2). If your entity does not qualify as a CPB, it must participate on its own behalf.
  • Agreement Negotiation: Pay close attention to the draft agreement under Article 38. As a CPB, you may face specific obligations regarding the management of contracts awarded by the Commission. Ensure your internal processes can handle the administrative burden of acting as an intermediary between the Commission and other public bodies.
  • Downstream Compliance: If you act as a CPB, you are responsible for ensuring that the services procured through the Commission are distributed in compliance with national public procurement rules and CADA's sovereignty requirements (e.g., Union assurance levels). Document your procedures for allocating services to other public bodies to demonstrate fairness and transparency.
  • Liability and Risk: Understand the liability framework. While the Commission manages the procurement, your role as a CPB may expose you to specific risks related to the downstream use of services. Ensure your legal agreements with end-users (other public bodies) clearly delineate responsibilities for compliance with technical and security standards.
  • Strategic Aggregation: Leverage your CPB status to aggregate demand from multiple departments or regions. This can increase your bargaining power within the Commission's framework and potentially lead to better terms or more tailored solutions for your specific needs.

Common misconceptions

"All contracting authorities are automatically CPBs." No. Only those that qualify as central purchasing bodies under Article 2(1), point (16) of Directive 2014/24/EU can participate as such. Others must participate on their own behalf. The CADA proposal does not create a new definition of CPB but relies on the existing EU definition.

"The Commission handles all downstream distribution." No. If you act as a CPB, you are responsible for the downstream distribution of services to other public bodies within your jurisdiction. The Commission procures on your behalf, but you manage the internal allocation to your subordinate entities.

"CPB status exempts you from CADA's sovereignty requirements." No. Regardless of whether you act as a CPB or on your own behalf, the services procured must meet the relevant Union assurance levels determined by risk assessments under Article 29. Your role as a CPB does not alter the technical and security obligations of the services themselves.

"The Article 38 agreement is identical for all participants." No. While the agreement sets the overall framework, Article 37(2) explicitly states that "specific rules and obligations governing their participation may be imposed where they participate as central purchasing bodies." This distinguishes their participation from that of standard contracting authorities.

Related

This is general information about a draft EU regulation, not legal advice.