How do I report CADA cloud and AI procurement-of-innovation data to the Commission?

As proposed in the Cloud and AI Development Act (CADA), Member States are legally required to monitor and report annually to the European Commission on the

Summary As proposed in the Cloud and AI Development Act (CADA), Member States are legally required to monitor and report annually to the European Commission on their use of procurement of innovation for cloud computing services and AI systems. This obligation, set out in Article 33, mandates the collection of specific data points: the size of participating economic operators, detailed SME participation trends (including contract numbers, value shares, and cross-border participation), and the specific measures taken to improve SME access. Crucially, Article 33(2) requires that this data be actively used to identify barriers and design simplified, proportionate strategies to remove them. This reporting cycle supports the broader national objective that at least 25% of such procurement be awarded to innovative SMEs.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, seeks to transform the European cloud and AI ecosystem not only by building infrastructure but by stimulating demand for innovative, European solutions. A critical mechanism for achieving this is the public sector's purchasing power. To ensure this demand-side strategy is effective and inclusive, Article 33 establishes a rigorous monitoring and reporting framework specifically focused on procurement of innovation.

Unlike general procurement statistics, this framework targets the specific subset of procurement intended to foster technological development and digital resilience. The reporting obligation is not a passive administrative task; it is a strategic tool designed to drive market change.

The Legal Basis: Article 33(1)

Article 33(1) imposes a clear duty on Member States: they "shall monitor and report on their use of procurement of innovation in cloud computing services and AI systems."

This provision creates a continuous feedback loop. Member States must track every instance where they procure innovative cloud or AI solutions. The term "procurement of innovation" is distinct from standard procurement; it refers to procedures aimed at acquiring new solutions that do not yet exist on the market or require significant adaptation, thereby driving technological advancement. By mandating this monitoring, CADA ensures that public spending in these critical sectors is transparent and measurable.

The Annual Reporting Cycle

The frequency of this reporting is strict. Article 33(3) stipulates that Member States must inform the Commission "on a yearly basis." This annual cadence allows the Commission to track progress over time, identify emerging trends, and assess the effectiveness of national strategies without waiting for multi-year reviews.

The data reported must be granular and specific. Article 33(3) breaks down the required information into three distinct categories, each serving a specific analytical purpose:

1. The Size of Economic Operators

The first data point required is "the size of the economic operators participating."

Purpose: This metric allows the Commission and Member States to map the market structure of the cloud and AI sector. It answers the question: Who is winning public innovation contracts?
Analysis: By distinguishing between micro, small, medium, and large enterprises, authorities can determine if public procurement is reinforcing the dominance of large incumbents or successfully opening doors for smaller, agile innovators. If the data shows a consistent skew toward large operators, it signals a potential market failure or a barrier to entry for smaller firms.

2. SME Participation Trends

The second and most detailed category concerns "SMEs participation trends." Article 33(3)(b) explicitly requires Member States to report:

The number of contracts awarded to SMEs: A raw count of how many times an SME has won an innovation contract for cloud or AI.
The share of the total contract value awarded to SMEs: Expressed as a percentage, this metric reveals the economic weight of SMEs in the sector. A high number of contracts with low total value might indicate that SMEs are only winning small, low-risk pilot projects rather than core infrastructure contracts.
The share of cross-border SME participation: Where available, this data point is vital for assessing the health of the Single Market. It measures whether SMEs are able to compete and win contracts in Member States other than their own. A low cross-border share suggests persistent barriers such as language requirements, differing national standards, or lack of market information.

3. Measures Taken to Improve SME Access

The third category requires a qualitative and quantitative account of "measures taken to improve SMEs access to public procurement procedures."

Purpose: This moves beyond what happened to how it happened. It forces Member States to document the specific interventions they have deployed.
Examples of Measures: These could include the division of contracts into smaller lots, the simplification of administrative procedures, the use of pre-commercial procurement (PCP), or the implementation of specific capacity-building programs for SMEs.
Requirement: The report must detail these actions to demonstrate that the Member State is actively working to lower the entry threshold for smaller players.

Using Data to Remove Barriers: Article 33(2)

The most powerful aspect of Article 33 is not just the collection of data, but the mandated use of that data. Article 33(2) states that Member States "shall take appropriate measures to ensure that the monitoring and reporting referred to in paragraph 1 are actively used to identify barriers to SMEs participation in procurement procedures."

This clause transforms the reporting obligation from a bureaucratic exercise into a driver of policy reform. The data collected under paragraph 3 must be analyzed to pinpoint specific obstacles. For instance:

If the data shows a lack of cross-border participation, the Member State must investigate whether language barriers or complex national certification requirements are the cause.
If the share of contract value awarded to SMEs is low despite a high number of contracts, the analysis might reveal that contracts are being artificially split into tiny lots that are unattractive to larger innovators, or conversely, that the lots are too large for SMEs to bid on.

Based on this analysis, Member States are required to:

Improve access: Actively remove the identified barriers to ensure SMEs can compete on a level playing field.
Design simplified strategies: Create procurement strategies that are "simplified, proportionate and SME-friendly." This might involve standardizing tender documents, reducing turnover requirements, or offering dedicated support channels for SMEs.
Promote participation: Specifically target the participation of SMEs in innovation procedures foreseen under Directive 2014/24/EU (the Public Procurement Directive) and facilitate pre-commercial procurement of cloud computing services and AI systems.

The 25% Target and National Strategies

The reporting under Article 33 is inextricably linked to a concrete policy target. Article 33(4) sets an objective for Member States: they "shall pursue as objective that at least 25% of their procurement for cloud computing services and AI systems be awarded to innovative SMEs."

This target is not merely aspirational; it is a binding objective that Member States must integrate into their broader national strategies. Article 33(4) further mandates that Member States "include, in their national strategies referred to in Article 7, plans on how they intend to achieve this objective."

The annual reporting under Article 33 serves as the progress report against this 25% target. If a Member State's data shows they are falling short, the reporting framework forces them to adjust their national strategy and implement more aggressive measures to improve SME access. This creates a cycle of planning, action, measurement, and correction.

Who is Responsible?

The obligation to report falls squarely on Member States. While individual contracting authorities (such as ministries, municipalities, or public agencies) are the ones actually conducting the procurement and awarding the contracts, they do not report directly to the Commission. Instead, the Member State is responsible for aggregating the data from all its contracting authorities, analyzing it, and submitting the consolidated annual report.

This centralized approach ensures a cohesive national view. It allows the Member State to identify systemic issues that might be invisible at the level of a single contract or a single authority. It also ensures that the data is consistent and comparable across the Union, enabling the Commission to benchmark performance between Member States.

What this means for you

For public procurement officers, national ministries, and SMEs operating in the cloud and AI sector, Article 33 has significant practical implications.

For Public Procurement Officers and National Authorities

1. Data Capture is Critical You are the source of the data. If your internal procurement systems do not capture the size of the winning operator or the specific nature of the procurement (innovation vs. standard), your Member State cannot fulfill its Article 33 obligations.

Action: Ensure your contract award notices and internal databases record the size category (SME, SMC, Large) of the winner.
Action: Tag contracts specifically as "procurement of innovation" where applicable, distinguishing them from routine cloud service renewals.
Action: Track whether the winning SME is domestic or cross-border.

2. Design for SME Access Article 33(2) requires that data be used to remove barriers. As a procurement officer, you should proactively design tenders that are accessible to SMEs.

Action: Consider dividing large cloud/AI projects into smaller, manageable lots.
Action: Avoid excessive financial turnover requirements that disproportionately exclude smaller innovators.
Action: Use pre-commercial procurement (PCP) procedures where appropriate to co-develop solutions with SMEs.
Action: Document every measure you take to improve SME access. This documentation will feed directly into the national report and demonstrate compliance with CADA.

3. Align with the 25% Target Your Member State has a target of 25% for innovative SME procurement. Your individual decisions contribute to this aggregate.

Action: When evaluating tenders, consider the EU added value criteria outlined in Article 32, which can favor European innovators and SMEs.
Action: Prioritize innovative solutions from SMEs where they offer a viable and competitive alternative.

For SMEs and Cloud/AI Providers

1. Visibility and Opportunity The reporting framework is designed to highlight the success of SMEs. By participating in innovation procurement, you contribute to the data that proves the viability of the European SME sector.

Action: Ensure your company is correctly registered as an SME in public procurement databases.
Action: Look for tenders explicitly labeled as "procurement of innovation" or "pre-commercial procurement," as these are the focus of the Article 33 reporting.

2. Advocacy If you face barriers to participation, the data collected under Article 33 is the tool to expose them.

Action: Engage with your national competent authorities or industry associations to report specific barriers you encounter. This qualitative feedback, combined with the quantitative data, helps shape the "simplified, proportionate" strategies mentioned in Article 33(2).

Common misconceptions

Misconception 1: This applies to all cloud and AI procurement. Correction: Article 33 specifically targets procurement of innovation. It does not apply to routine, off-the-shelf cloud service renewals or standard IT maintenance contracts. The focus is on contracts that aim to foster technological development, strengthen digital resilience, and enable public authorities to benefit from secure, efficient, and trustworthy digital solutions that evolve with rapidly changing technological needs.

Misconception 2: The 25% target is a quota. Correction: Article 33(4) states that Member States "shall pursue as objective" that at least 25% of procurement be awarded to innovative SMEs. This is a strategic target to drive market change, not a rigid quota that guarantees SMEs a specific percentage of contracts regardless of merit. Procurement must still adhere to the principles of equal treatment, non-discrimination, and transparency. The goal is to create a level playing field where SMEs can compete and win based on quality and innovation.

Misconception 3: Reporting is a one-time event. Correction: The reporting is annual. Member States must submit this data every year. This allows for trend analysis and the assessment of the effectiveness of measures taken to improve SME access. Consistent reporting is essential for tracking progress toward the 25% target and adjusting strategies as needed.

Misconception 4: Only the Commission cares about this data. Correction: The data is crucial for Member States to evaluate their own progress. Article 33(2) explicitly requires that the data be "actively used to identify barriers." Ignoring the data collection aspect undermines the ability to identify and remove barriers to SME participation, ultimately hindering the Member State's ability to meet its national cloud and AI strategy goals.

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