Summary Under the proposed Cloud and AI Development Act (CADA), the EuroCloud Federation and Commission-led common procurement serve two fundamentally different functions for public-sector buyers. The EuroCloud Federation (Title IV, Chapter III) is a mechanism for public entities to share their own existing, self-owned cloud and data centre capacity with other public bodies, charging strictly cost-recovery fees. In contrast, Commission procurement (Title IV, Chapter IV) involves the European Commission acting as a central purchasing body to buy commercial cloud, software, and AI services from the market on behalf of participating authorities. While the Federation optimises internal public resources through cooperation, Commission procurement leverages collective buying power to secure better market terms through standard procurement procedures.
Detail
The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, establishes two complementary but legally and operationally distinct mechanisms to help public sector bodies access cloud and AI services. Understanding the distinction is critical for procurement officers and IT strategists, as each path entails different eligibility criteria, governance structures, financial models, and legal implications.
The EuroCloud Federation: Public-to-Public Sharing (Chapter III)
The EuroCloud Federation, established under Article 34, is designed to facilitate the sharing of public sector data centre services and cloud computing services between Union entities and public sector bodies. It is not a marketplace for buying new services from commercial vendors; rather, it is a federation for pooling existing public assets to reduce waste and improve resilience.
Core Mechanism and Eligibility According to Article 35, a member of the Federation (the "sharing entity") may share its services with another member (the "using entity") only if the sharing entity directly, or indirectly through an intermediate legal entity, owns the hardware through which the service is made available. This strict ownership requirement means the Federation is exclusively for public bodies that already control the underlying infrastructure. If a public body indirectly owns the hardware via an intermediate entity, the sharing entity must exercise "decisive influence" over that entity, and there must be no direct private capital participation in it.
The sharing entity must demonstrate to the Commission that it fulfils specific technical, operational, and organisational measures to ensure effective, secure, and resilient service provision before it is allowed to share services within the Federation.
Financial Model: Cost Recovery Only A defining feature of the EuroCloud Federation is that the sharing of services is treated as public-sector cooperation, not a commercial transaction. Article 35(5) states that the sharing entity may charge a fee to the using entity, but this fee must be "limited strictly to the costs that the sharing entity incurs in relation to the sharing of the service." These costs are restricted to additional expenses such as allocating and isolating resources, managing access, enabling integration, and ensuring compliance with Union law.
Crucially, Article 35(5) explicitly states that these fees "shall not constitute a pecuniary interest" and do not fall under Union public procurement rules. Therefore, the sharing of services within the Federation is exempt from the standard tendering requirements of Directive 2014/24/EU, provided the fees remain strictly cost-recovery.
Governance and Platform The Commission is tasked with establishing a platform for the EuroCloud Federation (Article 34(3)) that provides a catalogue of available services and a service platform for the exchange and orchestration of resources. The costs for administering the Federation are covered by fees levied on members, as detailed in Article 36. These fees are designed to cover the Commission's costs for assessing membership applications and maintaining the platform.
Commission Common Procurement: Buying from the Market (Chapter IV)
In contrast, the framework in Chapter IV empowers the European Commission to act as a central purchasing body to procure data centre services, cloud computing services, software, and AI systems from the commercial market. This mechanism is designed to harness collective purchasing power to achieve economies of scale and better terms for public authorities.
Core Mechanism Under Article 37, the Commission may carry out procurement activities for itself, for Union entities, and for contracting authorities of Member States. Participating entities include contracting authorities from Member States and partner organisations selected by the Commission. The Commission can procure services on behalf of these entities, conclude framework contracts, or operate dynamic purchasing systems. It can also act as a wholesaler, acquiring services and reselling them to participating entities.
This mechanism allows public bodies to access commercial services without conducting their own individual tender procedures, provided they join the Commission-led framework.
Governance and Decision Making The governance of Commission procurement is structured around a specific agreement between the Commission and at least two Member States, as outlined in Article 38. This agreement establishes a Steering Committee composed of the Commission and one representative from each participating Member State.
The Steering Committee is responsible for the strategic oversight of procurement activities, including proposing the strategic direction of the procurement agenda and approving the strategic direction of each procurement procedure before it is launched. However, the Commission retains full responsibility for the operation and management of the procurement activities, including deciding on the launch of procedures, the type of contract, and the award of contracts.
Financial Model Unlike the EuroCloud Federation's cost-recovery model for internal sharing, Commission procurement involves commercial contracts with third-party vendors. The costs of these procurement activities are jointly financed by the participating entities through fees levied by the Commission. Article 40 specifies that these fees must be "sufficient to cover those costs" (direct and indirect) and be set in advance. Any revenue remaining after covering costs enters the general budget of the Union.
Key Differences at a Glance
| Feature | EuroCloud Federation (Chapter III) | Commission Procurement (Chapter IV) |
|---|---|---|
| Primary Purpose | Share existing public-owned infrastructure | Buy commercial services from the market |
| Provider Type | Public sector bodies (Union entities/public authorities) | Commercial vendors (cloud/AI providers) |
| Legal Basis | Articles 34–36 | Articles 37–40 |
| Ownership Requirement | Sharing entity must own the hardware | No ownership requirement; buying from market |
| Pricing Model | Strict cost-recovery fees (no profit) | Commercial market prices + Commission admin fees |
| Procurement Rules | Excluded from standard procurement directives (public cooperation) | Deemed to fulfil obligations via Commission as central purchasing body |
| Governance | Commission platform; member fees | Steering Committee (strategic); Commission (operational) |
| Scope | Data centre and cloud services only | Data centre, cloud, software, and AI systems |
What this means for you
For public-sector procurement officers and IT strategists, the choice between these two mechanisms depends entirely on your organisation's infrastructure strategy and immediate needs.
If you have surplus capacity: If your public authority owns data centres or cloud infrastructure that is underutilised, the EuroCloud Federation allows you to monetise this idle capacity by sharing it with other public bodies. You can recover your operational costs without undergoing a full tender process, as the sharing is treated as public-sector cooperation. However, you must ensure you meet the technical and security requirements set by the Commission to join the Federation and that your hardware ownership is clear.
If you need new commercial services: If you need to acquire new cloud, AI, or software services from the market, the Commission's common procurement framework offers a way to pool demand with other Member States. This can provide access to better pricing and terms than individual national tenders might achieve. You would participate as a "participating entity" in the Commission-led framework contracts or dynamic purchasing systems.
Strategic Planning: You may use both mechanisms in tandem. For instance, a Member State could share its own sovereign-capable infrastructure via the EuroCloud Federation for sensitive workloads while using Commission procurement to buy complementary commercial services for less sensitive tasks. Both mechanisms aim to strengthen the EU's cloud ecosystem, but they address different supply-side realities: one optimises existing public assets, while the other aggregates demand for market leverage.
Common misconceptions
Misconception 1: The EuroCloud Federation is a public cloud marketplace. The Federation is not a marketplace where public bodies can buy services from commercial cloud providers. It is exclusively for sharing services between public entities that own the underlying hardware. Commercial providers cannot join the Federation to sell services; they must engage through the Commission's common procurement framework or national tenders.
Misconception 2: Commission procurement replaces national procurement rules entirely. While the Commission acts as a central purchasing body, participating entities are deemed to have fulfilled their obligations under applicable Union public procurement law by acquiring services through the Commission (Article 39). However, the Commission still follows EU procurement rules. This mechanism simplifies the process for national authorities but does not remove the legal framework; it shifts the execution to the EU level.
Misconception 3: Fees in the EuroCloud Federation can generate profit. The fees charged within the EuroCloud Federation are strictly limited to cost recovery. Article 35(5) explicitly states that fees shall not constitute a pecuniary interest. Any attempt to charge above cost-recovery levels would transform the sharing into a commercial service, which would then fall under standard public procurement rules and potentially disqualify it from the Federation's simplified cooperation framework.
Misconception 4: The Steering Committee runs the procurement. The Steering Committee provides strategic oversight and approves the direction of procurement procedures, but it does not run the procurement. The Commission retains full operational responsibility for launching procedures, managing contracts, and awarding contracts.
Related
- Why does CADA separate the EuroCloud Federation from Commission procurement?
- EuroCloud Federation vs Commission Procurement: What CADA Means for Public Buyers
- EuroCloud Federation & SMEs: How Startups Access CADA Central Procurement
- EuroCloud Federation vs. Commercial Procurement: What Cloud Providers Need to Know
- Is the EuroCloud Federation a procurement vehicle under CADA?
This is general information about a draft EU regulation, not legal advice.