Summary Under the proposed Cloud and AI Development Act (CADA), participating entities that accede to the common procurement framework after a dynamic purchasing system (DPS) has launched may still request to join that specific DPS during its validity. As proposed in Article 39(5), the Commission must approve such requests within 10 working days, provided the cumulative volume of new requests does not exceed 50% of the initial estimated quantities. Crucially, Article 39(6) restricts this mechanism exclusively to entities that joined the overarching agreement after the DPS was established; entities already party to the agreement at launch cannot use this late-entry route.

Detail

The proposed Cloud and AI Development Act (CADA) establishes a novel procurement framework to leverage collective buying power for cloud computing services, AI systems, and data centre services. Managed by the European Commission on behalf of Union entities and Member States, this framework relies heavily on dynamic purchasing systems (DPS) to ensure continuous access to suppliers in a rapidly evolving market. While standard public procurement rules typically freeze participation once a procedure is launched, CADA introduces a specific derogation to facilitate broader market access and maximize economies of scale without compromising procedural integrity.

The Legal Mechanism for Late Entrants

The core of the late-entry mechanism is found in Article 39(5) of the CADA proposal. This provision explicitly creates an exception to the standard rules of the Financial Regulation (Regulation (EU, Euratom) 2024/2509), specifically Article 168, which governs joint procurement.

The text of Article 39(5) states:

"By way of derogation from Article 168 of Regulation (EU, Euratom) 2024/2509, participating entities may request from the Commission, throughout the period of validity of a dynamic purchasing system, the possibility to participate in the system."

This clause acknowledges that the cloud and AI markets are dynamic. A Member State or Union entity may decide to join the common procurement framework months or years after a specific DPS has been initiated. Without this derogation, such entities would be forced to wait for the next procurement cycle or launch a separate, less efficient tender. CADA allows them to "plug in" to existing outcomes.

The 50% Volume Cap: A Critical Safeguard

To prevent the influx of new demand from distorting the market or altering the fundamental economics of the original tender, CADA imposes a strict quantitative limit. Article 39(5) mandates:

"Such request shall be approved by the Commission provided that the cumulative requests do not exceed 50% of the initial estimated quantities of the envisaged purchases."

This 50% cap is a hard constraint. It ensures that the total volume of purchases by late entrants does not exceed half of what was originally estimated when the DPS was launched. If the cumulative requests from all late entrants approach this threshold, the Commission cannot approve further requests until the cap is reset or the DPS concludes. This protects the suppliers who bid based on the original volume estimates, ensuring that the scale of the procurement remains within the parameters they agreed to.

The 10-Working-Day Approval Timeline

Legal certainty is paramount for public procurement planning. Article 39(5) establishes a binding deadline for the Commission to process these requests:

"The participation shall be approved within 10 working days of receipt of the request and shall allow the participating entities to be included in any future invitation to tender."

This 10-working-day window is mandatory. It prevents administrative bottlenecks and allows late entrants to integrate the DPS into their procurement schedules with predictability. Once approved, the entity is automatically eligible for any future invitations to tender issued under that DPS. It is important to note that this approval does not retroactively grant access to tenders that have already been issued or concluded.

Strict Eligibility: The "Late Accession" Requirement

The most critical constraint is found in Article 39(6), which narrows the scope of the derogation significantly. The provision states:

"The possibility referred to in paragraph 5 shall be available only to participating entities that accede to the agreement referred to in Article 38 after the dynamic purchasing system has been launched."

This creates a binary eligibility test:

  1. Eligible: Entities that signed the overarching common procurement agreement (the "agreement" under Article 38) after the specific DPS was launched. These are true "late entrants" to the framework.
  2. Ineligible: Entities that were already parties to the Article 38 agreement when the DPS was launched. These entities were expected to join the DPS during its initial setup phase. They cannot use the Article 39(5) derogation to join later; they must wait for a new DPS cycle.

This distinction ensures that the derogation is used only to bring new participants into the ecosystem, not to allow existing participants to bypass initial registration deadlines.

Legal Context and Derogations

This mechanism operates as a targeted derogation from the Financial Regulation. By explicitly carving out this exception, CADA prioritizes operational efficiency and market liquidity in the cloud and AI sectors. The Commission retains full operational responsibility for managing these requests, ensuring that the integrity of the DPS is maintained while expanding access to the framework. The derogation is strictly limited to DPSs; it does not automatically apply to framework contracts, which are governed by different rules regarding extension and participant admission.

What this means for you

For in-house counsel, procurement officers, and compliance teams in public sector bodies or Union entities, the late-entry mechanism under Article 39 presents a strategic opportunity, provided strict eligibility criteria are met.

  1. Verify Your Accession Date: Before submitting a request, you must confirm the exact date your entity acceded to the Article 38 common procurement agreement. If your entity was already a signatory when the DPS was launched, you are ineligible for the late-entry mechanism. You must wait for the next procurement cycle.
  2. Monitor the 50% Cap: The Commission's approval is conditional on the cumulative volume of requests. If the total demand from other late entrants is approaching 50% of the initial estimated quantities, your request may be rejected. Compliance teams should monitor Commission communications or public registers for indicators of DPS utilization levels to gauge the likelihood of approval.
  3. Plan for the 10-Day Window: While the Commission is legally bound to approve valid requests within 10 working days, internal planning should account for administrative lead time. Prepare your internal procurement approvals and budget authorizations in advance. Once the Commission grants access, you can immediately issue an invitation to tender to suppliers within the DPS.
  4. No Retroactive Rights: Understand that joining a DPS late only grants access to future invitations to tender. You cannot claim rights to contracts awarded before your approval. Ensure your compliance checks verify the status of ongoing tenders within the DPS to avoid any conflict of interest or procedural errors.
  5. Documentation is Key: Maintain clear records of your accession date to the Article 38 agreement and the date of your request under Article 39(5). This documentation will be vital for auditing purposes to demonstrate that you met the eligibility criteria of being a "late acceding" entity.

Common misconceptions

Misconception 1: Any entity can join an active DPS at any time. Reality: Article 39(6) restricts this right exclusively to entities that joined the overarching procurement agreement after the DPS was launched. Entities that were already part of the framework are expected to have joined the DPS during its initial phase and cannot use this derogation.

Misconception 2: Late entrants can participate in tenders already in progress. Reality: Article 39(5) explicitly states that approval allows entities to be included in "any future invitation to tender." It does not grant retroactive participation in tenders that have already been issued or concluded.

Misconception 3: The Commission can deny requests arbitrarily. Reality: The Commission's approval is conditional only on the 50% cap. If the cumulative requests remain within this limit, the Commission is obligated to approve the request within 10 working days. There is no discretion to reject a request based on qualitative factors like the entity's size or sector, provided the quantitative cap is respected.

Misconception 4: This applies to framework contracts as well. Reality: Article 39(5) specifically mentions "dynamic purchasing system." While framework contracts are also used under CADA, the specific late-entry derogation with the 50% cap is tailored to the continuous nature of DPS. Framework contracts have different rules for extension and new participant admission, which are not covered by this specific mechanism.

Related

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