Summary As proposed in the Cloud and AI Development Act (CADA), public contracting authorities from EFTA States and EU candidate countries can participate in the EU's common cloud and AI procurement framework. Article 38(9) explicitly allows the Steering Committee to approve their participation without requiring a new bilateral or multilateral treaty. This derogation significantly widens the geographic reach of the central purchasing mechanism, enabling non-EU public bodies to access collective EU buying power for cloud computing services and AI systems, provided they meet the conditions set by the Committee.

Detail

The proposed CADA establishes a comprehensive framework for the joint procurement of data centre services, cloud computing services, software, and AI systems. This mechanism is designed to harness the collective purchasing power of the EU to secure better terms, enhance security, and accelerate the adoption of resilient digital solutions. Central to this framework is the agreement between the European Commission and Member States, governed by Title IV, Chapter IV of the proposal, specifically Article 38.

The General Accession Framework

Under Article 38(1), the Commission and at least two Member States must enter into an agreement laying down the practical arrangements for these procurement activities. This agreement serves as a mandate for the Commission to procure on behalf of, or in the name of, "participating entities." According to Article 37(1), participating entities include Union entities, contracting authorities of Member States, and partner organisations selected by the Commission.

Once this foundational agreement enters into force, Article 38(6) states that contracting authorities of participating Member States, Union entities, and selected partner organisations may accede to and benefit from it. These entities are then considered "participating entities" in the procedures where they elect to participate. The Steering Committee, composed of the Commission and representatives of participating Member States, oversees this process. Article 38(8) mandates that the Steering Committee sets transparent and non-discriminatory conditions for accession, considering factors such as size, minimum amounts, and other objective criteria.

The Derogation for EFTA and Candidate Countries

The most significant expansion of this framework is found in Article 38(9). This paragraph introduces a specific derogation from Article 168(2) of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation).

Normally, joint procurement or central purchasing activities involving non-EU entities would require a bilateral or multilateral treaty to establish the legal basis for such cooperation. However, Article 38(9) of CADA states:

"By way of derogation from Article 168(2) of Regulation (EU, Euratom) 2024/2509, the Steering Committee may approve the participation of contracting authorities from EFTA States and Union candidate countries without the need for a bilateral or multilateral treaty provided for such possibility."

This provision removes a significant legal and administrative barrier. It empowers the Steering Committee to approve the participation of authorities from European Free Trade Association (EFTA) States (such as Iceland, Liechtenstein, Norway, and Switzerland) and EU candidate countries (such as Albania, Serbia, Turkey, etc.) directly through the CADA governance structure. This mechanism is designed to foster strategic alignment and digital resilience in neighbouring regions without the lengthy diplomatic process of treaty negotiation.

Governance and Conditions

The approval of these non-EU participants is not automatic; it rests with the Steering Committee. Article 38(5) clarifies that the Steering Committee is responsible for the strategic oversight of procurement activities, including approving the strategic direction of each procedure before it is launched by the Commission.

Furthermore, Article 38(10) allows the Steering Committee to make accession to the agreement conditional on participating entities accepting one or more ancillary support services, as set out in Article 37. These services might include technical infrastructure, advice on procurement procedures, or invoicing services. This ensures that external participants are fully integrated into the operational and technical ecosystem of the CADA procurement platform.

Legal Effects for Participants

For a contracting authority from an EFTA State or candidate country that gains approval, the legal effects are substantial. Under Article 39(1), a participating entity is deemed to have fulfilled its obligations under applicable Union public procurement law where it acquires supplies or services through contracts awarded by the Commission under this Chapter. This means that by joining the CADA procurement pool, these external authorities can bypass certain national or local procurement hurdles, relying instead on the EU's centralised procurement mechanisms.

However, this participation does not grant them voting rights in the Steering Committee in the same way Member States do. Article 38(4) establishes the Steering Committee as being composed of the Commission and one representative from each participating Member State. While the Committee may appoint additional representatives of other Union entities or partner organisations (Article 38(4)), the primary governance and strategic decision-making power remain with the Commission and Member States.

What this means for you

For in-house counsel and compliance officers in EFTA States or EU candidate countries, this provision represents a strategic opportunity to access high-quality, secure cloud and AI infrastructure at potentially lower costs.

  1. Strategic Access to Sovereign Services: CADA's procurement framework is tightly linked to its sovereignty requirements. By participating, you may gain access to cloud services that meet specific Union assurance levels, which are increasingly required for handling sensitive data. This is particularly relevant if your organisation processes data that intersects with EU public sector requirements.
  2. No Treaty Negotiation Required: You do not need to wait for your government to negotiate a new bilateral treaty with the EU to participate in these specific procurements. The pathway is administrative, managed through the CADA Steering Committee, significantly accelerating the timeline for access.
  3. Compliance with EU Standards: Participating entities must adhere to the conditions set by the Steering Committee. This likely includes compliance with EU cybersecurity standards, data protection regulations, and potentially the CADA sovereignty framework itself. Ensure your internal procurement policies can align with these EU-centric requirements.
  4. Ancillary Services: Be prepared to accept ancillary support services if mandated by the Steering Committee. These services facilitate the technical and administrative integration into the EU's procurement platform, but they may come with their own contractual obligations and fees, as detailed in Article 37(4).

Common misconceptions

  • Misconception: EFTA and candidate countries have automatic, equal voting rights in the CADA procurement governance.
    • Reality: Article 38(4) limits the Steering Committee composition to the Commission and representatives of Member States. While EFTA/candidate authorities can participate as "participating entities" and may have appointed representatives, the strategic oversight and voting power remain primarily with the EU institutions and Member States.
  • Misconception: This provision applies to all EU public procurement.
    • Reality: This derogation is specific to the procurement activities outlined in CADA Title IV, Chapter IV (data centre services, cloud computing, software, and AI systems). It does not create a general right for EFTA/candidate countries to bypass treaty requirements for other types of EU joint procurement.
  • Misconception: Participation is open to private companies in EFTA/candidate countries.
    • Reality: Article 38(9) specifically mentions "contracting authorities" from EFTA States and candidate countries. The framework is designed for public sector bodies. Private entities in these countries would need to engage through other means, such as being selected as "partner organisations" by the Commission under Article 37(1), which is a separate and more restrictive pathway.

Related

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