Summary As proposed, the Cloud and AI Development Act (CADA) establishes a distinct governance model for central procurement that separates strategic direction from operational execution. Under Article 38, the framework is activated only after the European Commission enters into an agreement with at least two Member States. A Steering Committee, composed of the Commission and national representatives, provides strategic oversight by approving the procurement agenda and the strategic direction of individual procedures. However, Article 38(3) explicitly reserves operational responsibility for the Commission, including the decision to launch procedures, the choice of contract type, and the final award of contracts. This structure ensures collective strategic alignment while maintaining the efficiency of a single central purchasing body.

Detail

The governance architecture for CADA's central procurement mechanism is designed to balance the sovereign interests of Member States with the operational efficiency required for large-scale digital procurement. The system relies on a tripartite structure: the foundational agreement, the strategic Steering Committee, and the operational Commission.

1. The Foundational Agreement (Article 38(1)–(2))

The entire procurement framework is contingent upon a specific legal instrument: the procurement agreement. Article 38(1) mandates that before any procurement activity can be carried out under this chapter, the Commission and at least two Member States must enter into an agreement. This threshold ensures that the mechanism is not driven by a single national interest but represents a collective Union effort.

This agreement serves a dual purpose. First, it lays down the practical arrangements governing the procurement activities, including the decision-making processes, applicable conditions, and the evaluation of tenders. Second, as stated in Article 38(2), the agreement constitutes a formal mandate for the Commission. This mandate empowers the Commission to procure on behalf of, or in the name of, the participating entities (which include Union entities, Member State contracting authorities, and selected partner organisations).

The agreement is designed to be flexible yet robust. It covers procurement procedures for its entire period of validity and is deemed to satisfy the requirements for joint procurement agreements under the EU Financial Regulation (Regulation (EU, Euratom) 2024/2509). This legal alignment ensures that participating authorities are deemed to have fulfilled their public procurement obligations simply by purchasing through the Commission's framework.

2. The Steering Committee: Strategic Oversight (Article 38(4)–(5))

To ensure that the procurement activities reflect the collective priorities of the participating Member States, Article 38(4) requires the agreement to establish a Steering Committee. The composition of this body is strictly defined:

  • The European Commission.
  • One representative from each participating Member State at the national level.
  • Additional representatives may be appointed for other Union entities, contracting authorities, and partner organisations.

The role of the Steering Committee is exclusively strategic. It does not manage the procurement process itself. Under Article 38(5), the Committee's responsibilities are limited to:

  1. Proposing the strategic direction of the procurement agenda for a fixed period.
  2. Approving the strategic direction of each specific procurement procedure before it is launched by the Commission.

This approval mechanism is a critical control point. It ensures that no procurement procedure can commence without the strategic alignment of the Member States. The Committee verifies that the proposed procedure complies with the framework established by the Regulation and the overarching strategic goals of the Union. However, the text is explicit: the Steering Committee is not responsible for the operations of procurement activities.

3. Operational Responsibility: The Commission's Role (Article 38(3))

While the Steering Committee sets the "what" and "why" of the procurement agenda, the Commission retains full control over the "how" and "when." Article 38(3) is the definitive provision on operational responsibility. It states that the Commission remains responsible for:

  • The operation and management of procurement activities.
  • Deciding on the launch of a procurement procedure.
  • Determining the type of procedure and the type of contract.
  • The award of contracts.

This separation of powers is intentional. By centralising operational execution in the Commission, CADA aims to leverage economies of scale, ensure uniform application of rules, and maintain the agility of a central purchasing body. The Commission also retains the responsibility for setting fees, which are used to cover the costs of the procurement activities. This financial autonomy is crucial for the Commission to manage the budget effectively without needing Committee approval for every administrative cost.

4. Accession, Participation, and Derogations

The governance model allows for dynamic participation. Article 38(6) clarifies that once the agreement enters into force, other contracting authorities, Union entities, and partner organisations may accede to it. These entities become "participating entities" in the procedures they elect to join.

The Steering Committee plays a key role in managing this access. Under Article 38(8), the Committee must set transparent and non-discriminatory conditions for accession, considering objective criteria such as the size of the authority and minimum amounts. It also establishes rules for terminating participation if an authority fails to comply with its obligations.

A notable feature of this governance is the flexibility regarding international partners. Article 38(9) provides a specific derogation: the Steering Committee may approve the participation of contracting authorities from EFTA States and Union candidate countries without the need for a bilateral or multilateral treaty. This provision facilitates broader European cooperation in cloud procurement without being hindered by complex treaty requirements.

5. Ancillary Services and Fees

The governance framework also covers ancillary support services. Article 38(10) allows the Steering Committee to make accession conditional on participating entities accepting one or more ancillary support services (such as technical infrastructure or advice). These services are funded by fees levied by the Commission. While the Committee can mandate the acceptance of these services as a condition of entry, the setting of the fees themselves remains an operational task for the Commission, consistent with its broader operational mandate.

What this means for you

For legal counsel, procurement officers, and policy makers, understanding this governance split is essential for navigating the CADA central procurement landscape.

  • Strategic Influence vs. Operational Execution: If you represent a Member State, your primary leverage lies in the Steering Committee. You will have a direct vote on the strategic direction of the procurement agenda and the approval of specific procedures. However, you cannot dictate the operational details of a tender, such as the specific evaluation criteria or the timing of the award, as these are the Commission's operational domain.
  • Compliance and the Agreement: For contracting authorities seeking to participate, the agreement is the binding document. You must adhere to the practical arrangements it sets out, including the decision-making processes for procedure choice. Your legal team must ensure that internal procurement plans align with the strategic direction approved by the Steering Committee.
  • Mandatory Ancillary Services: Be prepared for the possibility that joining the framework may require accepting ancillary support services. While these services are designed to add value (e.g., technical infrastructure), they come with associated fees. Legal teams should evaluate the cost-benefit of these mandatory services during the accession process.
  • No Veto Power on Awards: Participating entities should not expect a veto right over specific contract awards. The Steering Committee approves the strategy of the procedure, but the Commission makes the final decision on the award. This ensures that the procurement process remains efficient and not subject to individual national vetoes once the strategic direction is set.

Common misconceptions

"The Steering Committee manages the procurement process."

  • Reality: The Steering Committee provides strategic oversight only. It approves the strategic direction of procedures but does not manage day-to-day operations, launch procedures, or award contracts. Article 38(3) and Article 38(5) clearly assign operational responsibility to the Commission.

"Any single Member State can initiate a CADA central procurement."

  • Reality: The framework cannot be activated by a single state. Article 38(1) requires an agreement between the Commission and at least two Member States. This ensures the mechanism is a collective Union effort.

"Participating entities can veto specific contract awards."

  • Reality: While the Steering Committee must approve the strategic direction of a procedure, the Commission retains the exclusive right to decide on the award of contracts (Article 38(3)). There is no mechanism for individual entities to veto a specific award, provided the procedure adhered to the approved strategic direction.

"The Steering Committee sets the fees for procurement."

  • Reality: The Steering Committee may set conditions for accession (including accepting ancillary services), but the Commission is responsible for setting the fees. This is an operational task reserved for the Commission to ensure financial autonomy.

Related

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