Summary Under the proposed Cloud and AI Development Act (CADA), public contracting authorities are mandated to include non-price award criteria in tenders for innovative cloud computing services and AI systems to evaluate a tenderer's contribution to the European ecosystem. As set out in Article 32, these "Union added value" criteria must be ancillary and not decisive, strictly linked to the contract subject matter, objectively defined, and expressly published in procurement documents. The regulation provides a specific framework for evaluating supply-chain resilience, integration of Union technologies, and the use of hardware designed or manufactured in the EU, with Recital 67 suggesting a maximum weighting of 15 out of 120 points to ensure these criteria remain proportionate to core technical and financial requirements.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a strategic lever for public procurement to actively shape the European digital supply chain. While the AI Act focuses on the safety and fundamental rights of AI systems, and the Data Act focuses on switching and interoperability, CADA specifically targets the sovereignty and resilience of the underlying infrastructure and technology stack.

For public buyers, Article 32 is the operational bridge between high-level sovereignty goals and day-to-day tendering. It transforms public procurement from a passive purchasing activity into an active instrument for strengthening the Union's technological autonomy.

The Legal Mandate: Article 32(1)

The obligation is clear and mandatory for a specific subset of procurements. 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 applies specifically to innovative procurements. It does not apply to standard, off-the-shelf commodity cloud services where no innovation is being sought. The legislative intent, as reflected in the explanatory memorandum and Recital 67, is to use the purchasing power of the public sector to drive market demand for European solutions, thereby reducing critical dependencies on third-country providers and fostering a competitive domestic ecosystem.

The Four Mandatory Conditions (Article 32(2))

To prevent these criteria from becoming disguised protectionism or violating the fundamental principles of EU public procurement (such as equal treatment and non-discrimination), Article 32(2) imposes four strict conditions. Any contracting authority applying these criteria must ensure they meet all of the following:

  1. Linked to the subject matter of the contract: The criteria must have a direct nexus to the specific cloud or AI service being procured. A buyer cannot evaluate a tenderer's general corporate social responsibility or their global footprint if it does not directly impact the delivery, security, or performance of the specific service. The "Union added value" must be relevant to the contract's execution.

  2. No unrestricted freedom of choice: The criteria must be objective, measurable, and verifiable. They cannot grant the contracting authority the power to make arbitrary decisions. The evaluation methodology must be defined in advance so that any tenderer can understand exactly how their proposal will be scored. This prevents the criteria from being used as a "black box" to favor a specific provider.

  3. Expressly set out in procurement documents: Transparency is non-negotiable. The criteria, their definitions, and the methodology for their application must be explicitly stated in the procurement documents or the contract notice before the tender is launched. They cannot be introduced, modified, or clarified after bids have been submitted.

  4. Ancillary and not decisive: This is the most critical safeguard. Article 32(2)(d) mandates that these criteria must be "ancillary and not decisive in the award of the contract." This means they cannot override the primary technical and financial criteria that determine the "most economically advantageous tender" (MEAT). The core performance, quality, and price of the service must remain the dominant factors.

    Recital 67 provides practical guidance on this point, suggesting that contracting authorities "could consider a maximum weighting of 15 out of 120 points to be allocated to European added value within the overall evaluation methodology." This 12.5% cap ensures that while the criteria are significant enough to influence the outcome, they remain subordinate to the core contract requirements.

The Four Factors for Evaluation (Article 32(3))

While the conditions in Article 32(2) define how the criteria must be applied, Article 32(3) defines what can be evaluated. It provides a non-exhaustive list of factors that contracting authorities can use to assess the extent of a tenderer's contribution. These factors focus on supply chain resilience, technological integration, and innovation.

When drafting evaluation grids, public buyers should assess tenderers based on the following four pillars:

1. Strengthening the Digital Technology Supply Chain

The first factor evaluates the tenderer's contribution to "strengthening the digital technology supply chain in the Union."

  • Key Indicator: The use of software or hardware designed or manufactured in the Union.
  • Practical Application: Buyers can request evidence of where the critical components of the cloud stack (e.g., servers, networking gear, operating systems, middleware) were designed or manufactured. A tenderer that sources components from EU-based manufacturers or designs software within the EU would score higher than one relying entirely on third-country supply chains.

2. Integration of Union Technologies

The second factor assesses whether the tenderer has "integrated technologies developed in the Union."

  • Key Indicators:
    • Use of research and development results stemming from Union-funded research and development programmes (e.g., Horizon Europe, Digital Europe Programme).
    • Use of tools, standards, specifications, software, models, or other technology developed in the Union.
  • Practical Application: A tenderer might demonstrate this by showing that their AI model was trained using datasets or algorithms developed under an EU grant, or that their cloud platform integrates with EU-developed open-source standards or interoperability frameworks.

3. Innovation Contributing to Security of Supply

The third factor looks at 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."

  • Key Indicator: The nature of the innovation itself.
  • Practical Application: This rewards tenderers who are not just selling existing products but are actively developing new capabilities that reduce strategic dependencies. For example, a tenderer proposing a novel encryption method developed in the EU to protect data against third-country access, or a new architecture that enhances the resilience of the European cloud infrastructure, would score well here.

4. Delivery via European Hardware Components

The fourth factor evaluates the extent to which the service is delivered using "critical computing, storage and networking hardware components designed and/or manufactured in the Union."

  • Key Nuance: The regulation acknowledges market realities. It states that this evaluation should be made "to the greatest extent feasible with regard to market availability and technical requirements."
  • Third-Country Exception: If it is not feasible to use EU-manufactured hardware, the regulation allows for a nuanced approach. Tenderers can still score points if they use hardware components from a third country that "contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem."
  • Practical Application: If a specific high-performance GPU is only available from a non-EU manufacturer, a tenderer could still demonstrate "Union added value" if that manufacturer has established a significant R&D or manufacturing presence in the EU, or if the component is part of a broader strategy to diversify supply chains away from single points of failure.

Step-by-Step Implementation Guide for Public Buyers

To comply with Article 32 while ensuring a fair and effective procurement process, public buyers should follow this structured approach:

Step 1: Determine Applicability Confirm that the procurement is for innovative cloud computing services or AI systems. If the tender is for standard, commodity services (e.g., basic storage or generic virtual machines without innovation components), Article 32(1) does not strictly mandate these criteria, though authorities may voluntarily apply similar principles.

Step 2: Define the Evaluation Methodology Draft the evaluation criteria based on the four factors in Article 32(3). Ensure each criterion is:

  • Linked to the specific service.
  • Objective (e.g., "Provide a list of hardware components manufactured in the EU" rather than "Prefer European hardware").
  • Verifiable (require specific evidence like certificates of origin, R&D grant numbers, or supply chain maps).

Step 3: Set the Weighting Adhere to the guidance in Recital 67. Allocate a maximum of 15 points out of 120 (or a proportionate equivalent) to the Union added value criteria. This ensures the criteria remain ancillary as required by Article 32(2)(d). Clearly state this weighting in the contract notice.

Step 4: Publish and Communicate Include the criteria and the scoring methodology explicitly in the procurement documents and contract notice. Do not wait until the evaluation phase to introduce these factors. Consider holding a market consultation to explain the criteria to potential bidders, ensuring they understand what evidence is required.

Step 5: Evaluate and Score During the evaluation, apply the criteria strictly according to the published methodology. Ensure that the evaluation committee understands that these criteria are not decisive. A tenderer with a superior technical solution and lower price should not lose the contract solely because another tenderer scored higher on Union added value, unless the technical/financial score is identical.

Step 6: Document the Decision Maintain a clear audit trail showing how the Union added value criteria were applied, the evidence provided by each tenderer, and the resulting scores. This documentation is essential for defending the award decision against potential challenges and for reporting on the procurement of innovation as required by Article 33.

What this means for you

For public-sector procurement officers, Article 32 represents a shift from passive compliance to active strategic sourcing. You are no longer just buying a service; you are investing in the resilience of the European digital ecosystem.

  • Revise Your Templates: Update your standard tender templates for cloud and AI to include a dedicated "Union Added Value" section. Use the four factors in Article 32(3) as a checklist to ensure you are evaluating the full spectrum of supply-chain and technological contributions.
  • Train Your Teams: Ensure that evaluation committees are trained to distinguish between core technical criteria (which are decisive) and Union added value criteria (which are ancillary). Misunderstanding this distinction could lead to legal challenges or the annulment of the procurement procedure.
  • Engage the Market Early: Use market consultations to signal your intent to apply these criteria. This encourages suppliers to prepare the necessary evidence regarding their European supply chains, R&D partnerships, and technology integration before the tender is launched.
  • Focus on Evidence, Not Origin: Remember that the goal is to evaluate contribution, not just origin. A third-country provider can score highly if they can demonstrate tangible contributions to the European ecosystem (e.g., local manufacturing, EU-based R&D, or integration of EU technologies). Avoid criteria that simply exclude non-EU entities, as this would likely violate the non-discrimination principles of EU procurement law.
  • Monitor and Report: Under Article 33, Member States must monitor and report on the use of procurement of innovation. By rigorously applying Article 32, you contribute to this national and EU-level data, helping to track progress in strengthening the European cloud and AI ecosystem.

Common misconceptions

"Union added value criteria are decisive factors." This is a critical error. Article 32(2)(d) explicitly states that these criteria must be "ancillary and not decisive." They cannot override the primary technical and financial requirements. A tenderer with a significantly better technical solution or lower price cannot be rejected solely because they scored lower on Union added value. The weighting must reflect this hierarchy (e.g., the suggested 15/120 points).

"This allows us to exclude non-European providers." No. The criteria are designed to evaluate and reward contributions to the European ecosystem, not to exclude providers based on their nationality. A provider from a third country can still win the contract if they demonstrate how their offering strengthens the European supply chain (e.g., through local manufacturing, R&D investment, or integration of EU technologies). The regulation explicitly allows for third-country hardware if it contributes to security of supply.

"This applies to all cloud procurements." Article 32(1) specifically targets innovative cloud computing services and AI systems. Standard, off-the-shelf procurements do not fall under this mandatory requirement, although authorities may choose to apply similar criteria voluntarily. The focus is on driving innovation and ecosystem development, not on routine purchasing.

"We can invent our own criteria." While Article 32(3) provides a non-exhaustive list, any criteria you create must still satisfy the four strict conditions in Article 32(2). They must be linked to the subject matter, objective, transparent, and ancillary. Creating arbitrary, unrelated, or discriminatory criteria would violate fundamental public procurement principles and could lead to legal challenges.

"We can apply these criteria to the sovereignty levels (Article 30)." Do not confuse Article 32 (Union added value) with Article 30 (procurement of sovereign cloud services). Article 30 sets mandatory minimum requirements for the assurance level (e.g., Level 1, 2, 3, or 4) based on a risk assessment. Article 32 sets award criteria to evaluate which tenderer offers the best contribution to the ecosystem among those who meet the minimum requirements. They are complementary but distinct mechanisms.

Official sources

Related

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