Summary Under the proposed Cloud and AI Development Act (CADA), public authorities must include non-price award criteria for "Union added value" when procuring innovative cloud computing services and AI systems. As proposed in Article 32, these criteria must be linked to the subject matter of the contract, expressly set out in procurement documents, and remain ancillary rather than decisive in the award decision. The criteria must evaluate how tenderers strengthen the EU digital supply chain, integrate EU-developed technologies, and utilize hardware designed or manufactured in the Union. Crucially, Article 32(2) mandates that these criteria cannot be decisive, while Article 32(3) defines the specific pillars of evaluation: supply chain strengthening, technology integration, security of supply, and EU hardware feasibility.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a targeted mechanism to leverage public procurement as a strategic tool for reducing dependence on third-country cloud providers and strengthening the internal market. While the Act establishes a sovereignty framework for cloud assurance levels (Title IV, Chapter I), Article 32 specifically addresses the quality evaluation phase of public tenders. It mandates that contracting authorities evaluate the "European added value" of a tender, ensuring that the public sector's buying power drives the development of a resilient, European cloud and AI ecosystem.

This requirement applies specifically to public procurement procedures for innovative cloud computing services and AI systems. It is not a blanket mandate for all routine cloud refreshes but targets procurement where the goal is to foster technological development, security of supply, and the uptake of European solutions.

The Legal Framework: Article 32(1) and the Scope of Application

Article 32(1) states: "In public procurement procedures for innovative cloud computing services and AI systems, contracting authorities shall include, as part of the quality evaluation of the tender, non-price award criteria that allow them to evaluate the tenderer's contribution to the development of a European cloud and AI ecosystem."

This provision creates a mandatory obligation ("shall include") for contracting authorities when the subject matter is "innovative." The term "innovative" is not explicitly defined in Article 32 itself but is understood in the context of the Act's broader objectives (Title II and Title IV) to include projects involving frontier AI, sovereign cloud stacks, or the deployment of new technologies where off-the-shelf solutions may not fully meet the strategic resilience goals of the Union.

Drafting Constraints: The Four Pillars of Compliance (Article 32(2))

To prevent these new criteria from distorting competition or violating the fundamental principles of EU public procurement (such as equal treatment and transparency), Article 32(2) imposes four strict structural conditions. Any tender document drafted under CADA must adhere to these constraints:

  1. Linked to the subject matter: The criteria must be "linked to the subject matter of the contract." This means the evaluation of Union added value must relate directly to the performance, delivery, or lifecycle of the specific cloud or AI service being procured. Authorities cannot award points for general corporate social responsibility, unrelated environmental goals, or political statements unless they are intrinsically tied to the technical delivery of the service.
  2. No unrestricted freedom: The criteria must "not confer unrestricted freedom of choice on the contracting authority." The evaluation must be objective, measurable, and transparent. Bidders must be able to understand exactly how their proposal will be scored based on pre-defined metrics, preventing arbitrary decision-making by the evaluation committee.
  3. Expressly set out: The criteria must be "expressly set out in the procurement documents or in the contract notice." This ensures that bidders are fully informed of the Union added value requirements before they invest resources in preparing a bid. These criteria cannot be introduced or modified during the evaluation phase.
  4. Ancillary and not decisive: This is the most critical safeguard. Article 32(2)(d) mandates that the non-price award criteria "shall be ancillary and not decisive in the award of the contract." This means that while Union added value contributes to the overall quality score, it cannot outweigh the core technical and financial criteria directly connected to the performance requirements. A technically superior solution cannot be rejected solely because it has a lower Union added value score, provided it meets the minimum technical thresholds.

Recital 67 of the explanatory memorandum provides a practical benchmark for proportionality, suggesting that contracting authorities could consider a maximum weighting of "15 out of 120 points" for Union added value. While this specific figure is not in the enacting text of Article 32, it serves as a vital guide for ensuring the criteria remain "ancillary" and do not inadvertently become the decisive factor.

The Four Pillars of Union Added Value (Article 32(3))

Article 32(3) details the specific aspects that these non-price criteria must enable contracting authorities to evaluate. These four pillars map directly to the strategic goals of CADA: strengthening supply chains, integrating EU tech, securing hardware, and fostering innovation.

1. Strengthening the Digital Supply Chain

Article 32(3)(a) requires evaluating the extent to which the tenderer "contributes to strengthening the digital technology supply chain in the Union, including the use of software or hardware designed or manufactured in the Union."

  • Drafting Example: A tender for a cloud management platform could include a criterion asking bidders to disclose the percentage of their software stack (including middleware, orchestration tools, and management layers) that is developed within the EU.
  • Evidence Required: Bidders might be asked to provide a Software Bill of Materials (SBOM) indicating the origin of development, or declarations from their development teams regarding the location of R&D activities.
  • Hardware Focus: The criterion explicitly includes hardware. For a data centre procurement, authorities could evaluate the proportion of servers, storage arrays, or networking equipment that is designed or manufactured in the Union.

2. Integration of EU Technologies

Article 32(3)(b) focuses on the integration of technologies developed in the Union. This explicitly includes "research and development results stemming from Union funded research and development programmes" and the use of "tools, such as standards, specification, software, models or other technology developed in the Union."

  • Drafting Example: A tender for an AI system could award points for the use of AI models trained on datasets curated under EU-funded projects (e.g., Horizon Europe or Digital Europe Programme). It could also reward the integration of open-source standards or specifications developed by European standardization bodies (CEN, CENELEC, ETSI) that are embedded in the solution.
  • Strategic Value: This criterion encourages the uptake of European intellectual property and ensures that public funds invested in EU R&D are leveraged in public procurement.

3. Innovation for Security of Supply

Article 32(3)(c) evaluates whether "the innovation required to deliver the service contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem."

  • Drafting Example: This could be framed as an evaluation of the vendor's roadmap for reducing dependencies on single-source third-country components. A bidder might score higher if they demonstrate a clear, funded plan to migrate critical components to EU-based alternatives within a defined timeframe, thereby enhancing long-term security of supply.
  • Resilience Focus: This moves beyond static "origin" checks to dynamic "resilience" assessments, rewarding vendors who actively contribute to the ecosystem's robustness.

4. EU-Designed or Manufactured Hardware (The Feasibility Clause)

Article 32(3)(d) is specific to hardware. It evaluates whether the service is delivered, "to the greatest extent feasible with regard to market availability and technical requirements, through critical computing, storage and networking hardware components designed and/or manufactured in the Union."

  • The Feasibility Clause: This is a crucial nuance. The requirement is not absolute. It is qualified by "to the greatest extent feasible." If EU hardware cannot meet the specific technical requirements (e.g., specific high-performance computing accelerators for frontier AI), the authority cannot simply disqualify the bidder.
  • Alternative Scoring: The article provides an alternative: points can be awarded for hardware from a third country "that contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem." This could include hardware from third countries that are part of a strategic partnership or joint venture that strengthens the EU ecosystem.
  • Drafting Example: For a high-performance computing tender, the authority could ask for a breakdown of hardware components (CPUs, accelerators, network switches). Points would be awarded for components designed and manufactured in the EU. If EU hardware is not technically feasible, the authority could award points for third-country hardware that is part of a supply chain that reinforces EU security (e.g., through strict sovereignty compliance or joint R&D).

Practical Application for Procurement Officers

When drafting tender documents under CADA, procurement officers must ensure that the evaluation grid clearly separates these Union added value points from the core technical performance indicators.

  1. Structure the Evaluation Grid: Create a dedicated section for "Union Added Value" in the evaluation criteria table. Ensure the weighting is clearly defined and adheres to the "ancillary" principle (e.g., 10-15% of the total quality score).
  2. Define "Innovative": Ensure you correctly identify which procurements fall under "innovation procurement." These are typically projects where there is no off-the-shelf solution, or where you are seeking to develop new capabilities (e.g., frontier AI models, sovereign cloud stacks). Standard refresh contracts for existing infrastructure may not trigger this requirement, though the strategic nature of cloud often blurs this line.
  3. Balance the Scores: Remember the "ancillary" requirement. If your total quality score is 100 points, and 40 points are for Union added value, you risk violating Article 32(2)(d). Keep the weighting proportional to ensure the best technical solution still wins, even if its EU supply chain contribution is slightly lower than a competitor's.
  4. Prepare for Evidence: Bidders will need to provide evidence for these claims. Define what evidence you will accept in the tender documents (e.g., certificates of origin, software bills of materials, declarations of R&D funding sources, migration plans).

What this means for you

For public-sector procurement officers, Article 32 fundamentally changes how you structure your evaluation grids for innovative cloud and AI tenders. You can no longer treat the origin of technology as purely a commercial or geopolitical consideration outside the scoring mechanism. You must now formally integrate it into the quality evaluation.

  • Update Your Templates: Review your standard procurement templates for cloud and AI services. Add a dedicated section for "Union Added Value" in the evaluation criteria table.
  • Define "Innovative": Ensure you correctly identify which procurements fall under "innovation procurement." These are typically projects where there is no off-the-shelf solution, or where you are seeking to develop new capabilities (e.g., frontier AI models, sovereign cloud stacks). Standard refresh contracts for existing infrastructure may not trigger this requirement.
  • Balance the Scores: Remember the "ancillary" requirement. If your total quality score is 100 points, and 40 points are for Union added value, you risk violating Article 32(2)(d). Keep the weighting proportional (e.g., 10-15%) to ensure the best technical solution still wins, even if its EU supply chain contribution is slightly lower than a competitor's.
  • Prepare for Evidence: Bidders will need to provide evidence for these claims. Define what evidence you will accept in the tender documents (e.g., certificates of origin, software bills of materials, declarations of R&D funding sources).

Common misconceptions

Misconception 1: Union added value criteria replace technical quality.

  • Reality: Article 32(2)(d) explicitly states these criteria must not be decisive. They are a tie-breaker or a quality enhancer, not a replacement for performance. A technically inferior solution cannot win simply because it has higher EU added value.

Misconception 2: You must buy only EU-made hardware.

  • Reality: Article 32(3)(d) includes a feasibility clause: "to the greatest extent feasible with regard to market availability and technical requirements." If EU hardware cannot meet the performance needs (e.g., specific AI accelerator capabilities), you can still award points for third-country hardware that strengthens security of supply. It is not an absolute ban on non-EU hardware.

Misconception 3: This applies to all cloud contracts.

  • Reality: Article 32(1) specifies "innovative cloud computing services and AI systems." Routine, off-the-shelf cloud storage contracts may not qualify as innovation procurement. However, given the strategic nature of cloud, many authorities are treating cloud procurement as inherently innovative to foster market development.

Misconception 4: You can decide the weighting arbitrarily.

  • Reality: While Article 32 doesn't set a hard cap, Recital 67 suggests a maximum of 15 out of 120 points to ensure proportionality. Deviating significantly from this guidance could expose your tender to legal challenge for being non-ancillary or disproportionate.

Related

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