Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission would be empowered to act as a central purchasing body for Member State contracting authorities and selected partner organisations. As proposed in Article 37, the Commission can procure data centre services, cloud computing services, software, and AI systems on behalf of these entities through framework contracts or dynamic purchasing systems. Additionally, the Commission may act as a wholesaler by acquiring these services and reselling them, or in exceptional circumstances, donating them to participating entities. This mechanism aims to aggregate demand, reduce fragmentation, and leverage collective buying power to foster a resilient European cloud ecosystem.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a transformative mechanism to strengthen the EU's cloud and AI ecosystem by leveraging the purchasing power of the public sector. A cornerstone of this strategy is the empowerment of the European Commission to act as a central purchasing body, thereby aggregating demand across Member States to reduce dependencies on non-European providers and secure better terms for public services.

The Legal Basis: Article 37

The core provisions governing this mechanism are found in Article 37 of the CADA proposal. This article significantly expands the Commission's existing procurement activities under the Financial Regulation to include specific cloud and AI services for the benefit of Member States and Union entities.

Article 37(1) establishes that the Commission may carry out procurement activities to procure data centre services, cloud computing services, software, and AI systems for itself, for Union entities, and for contracting authorities of Member States. Crucially, it allows partner organisations selected by the Commission to participate in these activities. These entitiesβ€”comprising Member State contracting authorities, Union entities, and selected partnersβ€”are collectively defined as "participating entities" under the regulation.

Acting as a Central Purchasing Body: The Two Models

Article 37(3) explicitly outlines the two primary ways the Commission can act as a central purchasing body for Member State contracting authorities and partner organisations. These models are designed to offer flexibility depending on the needs and capacities of the participating entities.

1. Framework Contracts and Dynamic Purchasing Systems

Under Article 37(3)(a), the Commission may procure services on behalf of, or in the name of, one or more contracting authorities and partner organisations. This is achieved by:

  • Concluding framework contracts: These are agreements with one or more suppliers to establish the terms governing contracts to be awarded during a given period, particularly with regard to price and, where appropriate, the quantity envisaged.
  • Operating dynamic purchasing systems (DPS): These are completely electronic processes used for commonly used purchases which are limited in duration and open to any economic operator who meets the selection criteria.

These instruments are specifically intended for services required by the participating entities. By aggregating demand across multiple public bodies, this approach creates economies of scale. The proposal suggests this could secure better terms, prices, and innovation levels than individual Member States could achieve alone, while also driving the adoption of sovereign cloud solutions.

2. Acting as a Wholesaler

Alternatively, under Article 37(3)(b), the Commission may act as a wholesaler. In this capacity, it acquires the specified services and supplies and then:

  • Resells them to one or more contracting authorities of Member States; or
  • Donates them to these entities in exceptional circumstances.

This model is particularly relevant for smaller public authorities that may lack the technical expertise, resources, or market leverage to conduct complex cloud and AI procurements independently. By purchasing in bulk and reselling or donating, the Commission simplifies the procurement process, allowing authorities to access pre-vetted, compliant services without navigating the full tendering process themselves.

Ancillary Support and Platform Management

To ensure these procurement activities are effective and accessible, Article 37(4) allows the Commission to provide ancillary support to participating entities. This support is not limited to the act of purchasing but extends to the entire lifecycle of the procurement and contract management. The support may include:

  • Technical infrastructure: Enabling participating entities to use awarded contracts or award contracts under concluded framework agreements.
  • Advice and support: Assisting in the preparation and implementation of procurement procedures.
  • Direct execution: The preparation and conduct of procurement procedures on behalf of the entities concerned.
  • Administrative services: Handling invoicing and other administrative tasks relating to the contracts awarded.

This support can be provided directly by the Commission, through a subcontractor, or by delegation to Union bodies or agencies. Furthermore, Article 37(6) permits the Commission to establish and manage a common procurement platform to facilitate these activities, ensuring a unified digital interface for participating entities.

Participation, Accession, and Governance

The framework is designed to be flexible and voluntary. Article 37(1) clarifies that participating entities include contracting authorities of Member States, Union entities, and partner organisations selected by the Commission.

Accession to the agreement governing these procurement activities is detailed in Article 38. Before any procurement activity is carried out, the Commission and at least two Member States must enter into an agreement laying down practical arrangements. This agreement establishes a Steering Committee composed of the Commission and representatives from participating Member States, responsible for strategic oversight.

Crucially, Article 37(5) notes that accession to the agreement may be subject to the acceptance of one or more ancillary support services. This ensures that entities joining the framework are aligned with the operational requirements of the centralised system.

Financial Implications and Fees

The costs arising from these procurement activities are not borne by the general EU budget alone. As detailed in Article 40, the costs are jointly financed by the participating entities through fees levied by the Commission.

  • Fee Structure: The fees are set in advance and must be proportionate to the estimated costs of the activities. They are designed to cover all direct and indirect costs incurred by the Commission, including ancillary services.
  • Assigned Revenues: Revenues generated by these fees constitute internal assigned revenues within the meaning of the Financial Regulation. These revenues are assigned specifically to cover the costs of the procurement activities.
  • Initial Costs: Initial establishment costs may be borne by the general budget of the Union and reimbursed by the participating entities over a period not exceeding three years.

This cost-recovery model ensures that the central procurement mechanism remains financially sustainable without placing an undue burden on the EU budget, while still providing a cost-effective alternative for Member States.

What this means for you

For public-sector procurement officers, IT directors, and national authorities, the Commission's role as a central purchasing body under CADA represents a significant shift in how cloud and AI services can be acquired.

  • Reduced Administrative Burden: Smaller public authorities, which often lack the specialized technical expertise required for complex cloud and AI procurements, can rely on the Commission's aggregated contracts. This reduces the need for individual, resource-intensive tender processes, allowing national bodies to focus on service delivery rather than procurement logistics.
  • Access to Better Terms: By joining the Commission's framework contracts or dynamic purchasing systems, public bodies can benefit from the economies of scale achieved through aggregated EU-wide demand. This collective bargaining power can lead to more competitive pricing, improved service levels, and better access to innovative European providers.
  • Simplified Procurement via the Wholesaler Model: The "wholesaler" model allows authorities to purchase pre-vetted, compliant cloud and AI services directly from the Commission. This bypasses the need to conduct their own market research and tendering for standardised services, significantly accelerating deployment times.
  • Comprehensive Support and Guidance: The ancillary support provided by the Commission, including advice on procurement procedures, technical infrastructure, and contract management, can help public bodies navigate the complexities of acquiring advanced digital services. This is particularly valuable for entities new to sovereign cloud procurement.
  • Cost Recovery and Efficiency: While participating in these schemes involves paying fees to the Commission, these costs are designed to cover the administrative and operational expenses of the centralised procurement. The overall total cost of ownership may still be lower due to the efficiencies gained through aggregation and reduced administrative overhead.

Common misconceptions

Misconception: The Commission will force all public authorities to use its procurement services.

  • Reality: Participation in the Commission's central purchasing activities is voluntary. Member State contracting authorities and partner organisations can choose whether to join the framework contracts or dynamic purchasing systems. The Commission acts as a facilitator and aggregator, not a mandatory provider.

Misconception: The Commission will replace national procurement authorities entirely.

  • Reality: The Commission's role complements existing national procurement structures. It provides an additional option for procuring cloud and AI services, particularly for complex or large-scale needs. National authorities retain their autonomy and can continue to conduct their own procurements if they choose, provided they comply with relevant EU and national laws.

Misconception: Acting as a wholesaler means the Commission will own the infrastructure.

  • Reality: Acting as a wholesaler refers to the procurement and resale (or donation) of services and supplies. It does not imply that the Commission will own or operate the underlying cloud infrastructure. The Commission acts as an intermediary in the supply chain, aggregating demand and facilitating access to services from providers.

Misconception: All cloud and AI procurements must go through the Commission.

  • Reality: The Commission's central purchasing body role is specific to the services and entities covered under the CADA framework. Public authorities can still procure cloud and AI services through traditional national procurement processes. The CADA framework is an option to enhance efficiency and sovereignty, not a replacement for all national procurement activities.

Related

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