Summary Under the proposed Cloud and AI Development Act (CADA), the Union added value criterion is mandatory for public procurement procedures involving innovative cloud computing services and AI systems. Article 32(1) explicitly states that contracting authorities shall include non-price award criteria to evaluate a tenderer's contribution to the European cloud and AI ecosystem. However, this mandatory inclusion is strictly constrained: the criterion must be ancillary and not decisive in the award decision, preserving the primacy of core technical and financial criteria. While the baseline assessment is compulsory, contracting authorities retain discretion to apply additional non-price criteria beyond the specific Union added value elements listed in Article 32(3).

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a targeted mechanism to leverage public procurement as a driver for technological sovereignty. Unlike general procurement guidance, Article 32 imposes a specific, binding obligation on contracting authorities when procuring innovative solutions. This section details the mandatory nature of the Union added value criterion, its precise scope, and the legal constraints governing its application.

The Mandatory Obligation: "Shall Include"

The core of the obligation lies in the mandatory language of Article 32(1). The provision 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."

The use of the imperative "shall include" removes any ambiguity regarding the optionality of this criterion. For any procurement falling within the defined scopeβ€”innovative cloud computing services and AI systemsβ€”the contracting authority is legally required to integrate these criteria into its evaluation methodology. Failure to do so would constitute a breach of the Regulation as proposed. This is not a suggestion for best practice but a statutory requirement designed to shift market incentives toward European technological development.

Defining "Union Added Value"

While the inclusion is mandatory, the Regulation provides a specific framework for what constitutes "Union added value." Article 32(3) outlines the substantive elements that the non-price criteria must enable the contracting authority to evaluate. These criteria focus on four key dimensions:

  1. Supply Chain Strengthening: Evaluating the extent to which the tenderer contributes to strengthening the digital technology supply chain in the Union, including the use of software or hardware designed or manufactured in the Union.
  2. Integration of Union Technologies: Assessing whether the tenderer has integrated technologies developed in the Union, including research and development results stemming from Union-funded research and development programmes, and the use of tools, standards, specifications, software, models, or other technology developed in the Union.
  3. Security of Supply: Determining if the innovation required to deliver the service contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem.
  4. Hardware Origin and Feasibility: Evaluating whether the service is delivered, "to the greatest extent feasible with regard to market availability and technical requirements," through critical computing, storage, and networking hardware components designed and/or manufactured in the Union. Crucially, where this is not feasible, the criteria must allow for the evaluation of hardware from a third country that contributes to strengthening security of supply and the European ecosystem.

The "Ancillary and Not Decisive" Constraint

A critical safeguard in Article 32 is the limitation on the weight of these criteria in the final award decision. Article 32(2) establishes four conditions that the non-price award criteria must meet, the most significant being that they must be:

"ancillary and not decisive in the award of the contract."

This constraint ensures that the Union added value criterion functions as a differentiator among compliant bids rather than a barrier to entry or a primary selection factor. The procurement must remain focused on the "performance requirements" of the contract. The technical and financial criteria directly connected to the subject matter of the contract retain their primacy. Consequently, a tenderer with superior technical performance and lower cost cannot be rejected solely because their Union added value score is lower than a competitor's, provided the Union added value criterion was applied correctly as an ancillary factor.

Discretion to Apply Additional Criteria

While the baseline Union added value assessment is mandatory, Article 32(3) explicitly preserves the discretion of contracting authorities to go beyond the minimum requirements. The provision states that the listed criteria apply:

"Without affecting contracting authorities' discretion to apply additional criteria."

This means that while the specific Union added value elements must be included, authorities are not restricted to only these criteria. They may introduce other non-price award criteria relevant to the specific procurement, provided these additional criteria also comply with the general conditions set out in Article 32(2) (e.g., being linked to the subject matter, not conferring unrestricted freedom of choice, and being expressly set out in the procurement documents). This flexibility allows authorities to tailor the procurement to specific local or sectoral needs while still meeting the mandatory CADA obligation.

Scope: "Innovative" Procurement

The mandatory nature of Article 32 is strictly tied to the scope of the procurement. The obligation applies specifically to procedures for "innovative cloud computing services and AI systems." The Regulation does not define "innovative" in Article 32 itself, implying that the definition aligns with existing public procurement frameworks (such as the definition of "innovation partnership" or "pre-commercial procurement" under the Public Procurement Directives) or the specific context of the procurement documents.

However, the text of Article 33 further contextualizes this by requiring Member States to monitor "procurement of innovation" and aiming for at least 25% of such procedures to be awarded to innovative SMEs. This suggests that the mandatory Union added value criterion is a key tool in the broader CADA strategy to foster innovation, distinct from standard procurement of off-the-shelf cloud services. For standard, non-innovative procurements, the mandatory inclusion of Article 32 criteria may not apply, though other CADA provisions regarding sovereignty levels (Articles 29 and 30) would still govern the procurement.

What this means for you

For legal counsel, procurement officers, and compliance teams within public bodies and Union entities, the mandatory nature of Article 32 requires immediate operational adjustments.

1. Audit Procurement Portfolios: Review all upcoming and planned procurement procedures to identify those involving innovative cloud computing services and AI systems. If a procedure falls within this scope, the inclusion of Union added value criteria is not optional.

2. Revise Evaluation Methodologies: Update tender documentation and evaluation matrices to explicitly include the non-price criteria defined in Article 32(3). Ensure that the scoring methodology clearly distinguishes these criteria from technical and financial scores.

3. Calibrate Weighting: Design the weighting of the Union added value criteria to ensure they remain ancillary and not decisive. While the exact percentage is at the authority's discretion, it must be proportionate and subordinate to the core performance criteria. A common approach is to assign a weight that allows for differentiation but cannot override a significant deficit in technical or financial merit.

4. Document the "Feasibility" Assessment: For the hardware origin criterion (Article 32(3)(d)), prepare to document the "market availability and technical requirements" assessment. If Union-manufactured hardware is not feasible, the authority must be prepared to justify why and how third-country hardware was evaluated for its contribution to security of supply.

5. Leverage Discretion for Additional Criteria: While the baseline is mandatory, use the discretion in Article 32(3) to add specific criteria relevant to your sector (e.g., specific open-source requirements or local skills development) to further align with national or regional strategies, ensuring these additional criteria also meet the "ancillary" test.

Common misconceptions

Misconception 1: Union added value is a "nice-to-have" optional extra. This is incorrect. Article 32(1) uses the mandatory phrase "shall include." For procurements involving innovative cloud and AI, omitting these criteria is a direct violation of the proposed Regulation.

Misconception 2: Union added value can be the deciding factor in the award. This is incorrect. Article 32(2) explicitly mandates that the criterion be "ancillary and not decisive." It cannot be used to award a contract to a technically inferior or more expensive bidder solely based on Union origin.

Misconception 3: The criterion applies to all cloud procurement. This is incorrect. The mandatory obligation is limited to innovative cloud computing services and AI systems. Standard procurement of established, non-innovative cloud services does not trigger the Article 32(1) obligation, though sovereignty risk assessments under Article 29 may still apply.

Misconception 4: Authorities cannot add other criteria. This is incorrect. Article 32(3) explicitly states that the mandatory criteria apply "without affecting contracting authorities' discretion to apply additional criteria." Authorities may include other relevant non-price criteria alongside the Union added value assessment.

Related

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