Summary As proposed in COM(2026) 502 final, the Cloud and AI Development Act (CADA) introduces a strategic "open source first" approach to reduce public spending by prioritizing the reuse of existing software over rebuilding solutions from scratch. Article 41 requires public authorities to evaluate the total cost of ownershipβ€”not just license feesβ€”when choosing between open source and proprietary options. Article 42 mandates that any software developed with public funds and released under an open-source license be shared via a centralized catalogue to maximise the value of public expenditure and reduce duplication costs, as explicitly stated in Recital 83.

Detail

The proposed Cloud and AI Development Act (CADA) establishes a framework to strengthen Europe's cloud and AI ecosystem, with a specific focus on reducing technological dependencies and enhancing cost efficiency. A critical component of this strategy is the promotion of open-source software (OSS) within the public sector. The proposal recognizes that open source is not merely a technical preference but a strategic lever for fiscal responsibility, security, and innovation.

The Legal Basis for Cost Reduction

The core provisions addressing open-source adoption and cost reduction are located in Title IV, Chapter V of the proposal. These articles work in tandem to shift procurement behavior from isolated, proprietary acquisitions to a collaborative, reusable ecosystem.

Article 41: Promoting Open Source Solutions and Open Source First Article 41 establishes the obligation for the Union and Member States to take necessary measures to encourage Union entities and public sector bodies to use and facilitate the reuse of open standards and components released under an open-source license. Crucially, the article mandates that this encouragement must take into account specific objective criteria, including functionalities, security, and total cost.

This provision fundamentally shifts the procurement mindset. Historically, public tenders often focused on the initial purchase price of software licenses. Article 41 requires authorities to evaluate the total cost of ownership. By considering the total cost, public administrations are guided to weigh the long-term financial benefits of open sourceβ€”such as the absence of recurring license fees, greater flexibility, and reduced vendor lock-inβ€”against potential upfront costs for implementation or support. The goal is to identify the most economically efficient solution over the software's entire lifecycle.

Article 42: Share and Reuse of Software Article 42 complements Article 41 by addressing the lifecycle of software developed by or for public bodies. It states that when a Union entity or public sector body makes software, to which it holds intellectual property rights, available for reuse under an open-source license, it must do so using a catalogue or repository connected to the EU Open Source Solutions Catalogue.

This requirement ensures that software developed with public money is not siloed within a single department or Member State. Instead, it is made discoverable and reusable by others across the Union. By centralizing access to these solutions, the regulation aims to prevent different public bodies from independently funding the development of identical or similar software, thereby directly reducing duplication of effort and expenditure.

The Rationale: Reducing Duplication and Maximizing Value

The economic rationale behind these articles is explicitly detailed in the proposal's explanatory memorandum and recitals. Recital 83 provides the foundational argument for this approach. It notes that an increasing number of Union entities and public sector bodies are sharing software developed by or for them. The recital states that this practice "may be considered to be in the public interest and may maximise the value of public expenditure, reduce duplication costs and foster innovation across the Union."

The recital highlights a persistent inefficiency in the current landscape: software is often made available in different, disconnected repositories, which hampers searchability, discoverability, and ultimately, reuse. By requiring connection to the EU Open Source Solutions Catalogue (hosted on the Interoperable Europe portal, as noted in Recital 83), CADA ensures that solutions are easily linked to further relevant information and training. This connectivity increases the likelihood of adoption and reuse, ensuring that public investments in software yield returns beyond the initial deploying entity.

From Rebuild to Reuse

The cost reduction mechanism operates on the principle of "reuse over rebuild." When public administrations are encouraged to look first at existing open-source solutions (Article 41) and when those solutions are easily discoverable via a centralized catalogue (Article 42), the incentive to commission bespoke, proprietary software diminishes.

Proprietary software often involves significant recurring costs, including annual license fees, mandatory upgrade costs, and dependency on a single vendor for support. In contrast, open-source solutions, when reused effectively, distribute the maintenance and development costs across a broader community or multiple public entities. This shared burden model lowers the financial entry barrier for individual administrations and enhances the overall return on public investment.

Furthermore, the proposal supports the establishment of a network of Open Source Programme Offices (OSPOs) under Article 44. These offices facilitate the exchange of best practices and technical challenges related to licensing, security, and procurement. By providing expert guidance, OSPOs help reduce the hidden costs and risks often associated with managing open-source software in a public-sector context, further supporting the cost-efficiency goals of Article 41.

What this means for you

For public-sector procurement officers, IT managers, and policy makers, the proposed CADA introduces a structured framework for evaluating software investments through the lens of long-term value and sovereignty.

  1. Evaluate Total Cost, Not Just License Fees: When drafting procurement specifications or evaluating tenders, you must consider the "total cost" as a key criterion under Article 41. This includes assessing the long-term financial impact of vendor lock-in, future upgrade costs, and the flexibility of the solution. Open-source options may have lower total costs over time, even if initial integration costs are higher.
  2. Prioritize Reuse Before Building: Before commissioning new software development, check the EU Open Source Solutions Catalogue. If a suitable solution already exists and is available under an open-source license, reusing it is aligned with the proposal's goal to reduce duplication costs. This "reuse over rebuild" approach is central to the Act's cost-saving strategy.
  3. Mandatory Registration for Reuse: If your organization develops custom software and decides to release it under an open-source license, you are required under Article 42 to make it available through a catalogue connected to the EU OSS Catalogue. This ensures your investment benefits the wider public sector and complies with the proposal's transparency and reuse mandates.
  4. Collaborate with OSPOs: Engage with your national or local Open Source Programme Office (as encouraged by Article 44) to access guidance on licensing, security assessments, and procurement strategies. This collaboration can help mitigate the perceived risks of open-source adoption and streamline your compliance efforts.

By adhering to these principles, you contribute to a more resilient, cost-effective, and sovereign European digital infrastructure, while ensuring that public funds are used efficiently to maximise the value of public expenditure.

Common misconceptions

  • "Open source is always free." While open-source software often has no license fee, it is not free of cost. Article 41 explicitly requires consideration of "total cost," which includes expenses for implementation, customization, maintenance, training, and support. The goal is not to choose the cheapest option blindly but to select the most cost-effective solution over its lifecycle.

  • "CADA forces you to use open source." Article 41 uses the language of "encourage" and "facilitate." It does not mandate that every procurement must be open source. Instead, it requires that open-source options be considered alongside proprietary ones, with decisions based on objective criteria such as security, functionality, and total cost. Proprietary solutions can still be chosen if they offer better value or meet specific security requirements.

  • "All public software must be open-sourced." Article 42 applies to software that public bodies voluntarily decide to make available for reuse. It does not force every piece of software developed by the public sector to be released publicly. However, if a decision is made to share it, it must be done through the designated connected catalogue to ensure discoverability.

  • "Open source is less secure." The proposal links open source with security and sovereignty. Recital 81 notes that open source plays an important role in ensuring transparency, security, and efficiency. By allowing auditability and reducing dependency on single vendors, open source can enhance security postures, provided that proper governance and maintenance practices are in place.

Related

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