Summary Under the proposed Cloud and AI Development Act (CADA), public buyers can bypass complex national tendering procedures by leveraging the European Commission as a central purchasing body. Article 39(1) of the proposal establishes a critical legal shortcut: a participating entity is "deemed to have fulfilled its obligations under applicable Union public procurement law" when it acquires services through contracts awarded by the Commission. This streamlined access, funded by cost-recovery fees under Article 40, allows authorities to benefit from collective bargaining power and sovereign cloud solutions without running their own tenders, provided they join the requisite inter-state agreement.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a transformative mechanism for public procurement in the digital sector. Recognizing that many contracting authoritiesβ€”particularly smaller onesβ€”struggle with limited financial resources, technical expertise, and fragmented purchasing power, the proposal empowers the European Commission to act as a central purchasing body. This framework is designed to harness collective buying power, ensure better terms, and accelerate the adoption of secure, sovereign, and innovative cloud and AI solutions across the Union.

The Mechanism: Commission as Central Purchasing Body

The core of this mechanism is established in Title IV, Chapter IV of the CADA proposal. The Commission is authorized to carry out procurement activities not only for itself but also for Union entities, contracting authorities from Member States, and selected partner organisations. These entities are collectively defined as "participating entities."

The Commission's role extends beyond simple aggregation of demand. Under Article 37, the Commission may:

  • Procure data centre services, cloud computing services, software, and AI systems on behalf of participating entities.
  • Conclude framework contracts or operate dynamic purchasing systems (DPS).
  • Act as a wholesaler by acquiring such services and supplies and reselling them, or in exceptional circumstances, donating them to participating entities.

This setup allows smaller public authorities, which might lack the scale to negotiate favorable terms individually, to benefit from economies of scale and the Commission's specialized procurement expertise. The Commission can also provide ancillary support, including technical infrastructure, advice on preparing procedures, and invoicing services.

Deemed Compliance and Legal Certainty

The most significant advantage of using this route is the legal certainty it provides regarding compliance with complex EU and national public procurement rules. Article 39(1) of the CADA proposal explicitly states:

"A participating entity shall be deemed to have fulfilled its obligations under applicable Union public procurement law where it acquires supplies or services by means of contracts awarded by the Commission under this Chapter, including through framework contracts concluded by or dynamic purchasing systems operated by the Commission acting as a central purchasing body, or any ancillary support services referred to Article 37."

This "deemed compliance" clause is pivotal. It means that once a public buyer joins the Commission's procurement framework and purchases through it, they are considered compliant with their obligations under Union public procurement law. This removes the administrative burden of running a separate national tender, managing bids, and defending procurement decisions against potential challenges, provided the Commission's process itself is compliant. The participating entity remains solely responsible for any parts of the procedure it conducts autonomously, but the central purchasing act itself is fully covered.

The Agreement and Steering Committee

Participation in this central purchasing route is not automatic; it requires a formal governance structure. Before any procurement activity is carried out, the Commission and at least two Member States must enter into an agreement laying down the practical arrangements. This agreement constitutes a mandate for the Commission to procure on behalf of the participating entities.

A Steering Committee, composed of the Commission and one representative from each participating Member State at the national level, provides strategic oversight. This committee is responsible for:

  • Proposing the strategic direction of the procurement agenda.
  • Approving the strategic direction of each procurement procedure before it is launched.
  • Ensuring compliance with the CADA framework.

Importantly, while the Steering Committee sets the strategy, the Commission remains responsible for the operation and management of the procurement activities, including the launch of procedures and the award of contracts. Member States may accede to the agreement at a later stage, and the participation of a contracting authority is not conditional on that Member State's participation, though the agreement itself requires at least two Member States to enter into force.

Financial Implications: Fees and Cost Recovery

The costs associated with these procurement activities are not borne by the general EU budget in the long term. Instead, they are jointly financed by the participating entities through fees, as detailed in Article 40.

  • Cost Recovery Principle: Fees are set in advance and must be proportionate to the estimated costs of the activities. They must reflect practices of comparable procurement frameworks and be sufficient to cover all direct and indirect costs incurred by the Commission in connection with the procurement activities, including ancillary services.
  • Internal Assigned Revenues: Revenues generated from these fees constitute "internal assigned revenues" within the meaning of the Financial Regulation. Any revenue remaining after covering the costs of the procurement activities is entered into the general budget of the Union.
  • Reimbursement of Initial Costs: Initial establishment costs, such as developing the common procurement platform, may be initially borne by the general budget of the Union. However, these must be reimbursed by the participating entities over a period not exceeding three years from the date the costs were borne.

This model ensures that the central purchasing mechanism is financially self-sustaining for the Commission, with costs passed directly to the beneficiaries who gain access to the framework. The fees are calculated pro-rata per transaction or via a flat fee per subsequent awarded contract, ensuring they do not exceed the verifiable costs incurred.

Flexibility and Dynamic Purchasing Systems

The CADA proposal introduces significant flexibility for participating entities, particularly regarding dynamic purchasing systems (DPS). Under a derogation from the Financial Regulation, the Steering Committee may approve the participation of contracting authorities that accede to the agreement after a DPS has already been established.

This allows new participants to join the system at any point during its validity, subject to prior approval by the Commission, without disrupting ongoing procedures. This feature is crucial for maintaining the agility and inclusivity of the central purchasing route. However, this flexibility is bounded: the cumulative requests for new participation must not exceed 50% of the initial estimated quantities of the envisaged purchases, and the participation must be approved within 10 working days of the request.

What this means for you

For public-sector procurement officers and legal counsel, the Commission's central purchasing route under CADA presents a strategic opportunity to streamline operations and access high-quality digital services. Here is how it impacts your role:

  1. Reduced Administrative Burden: By using the Commission's framework contracts or DPS, you avoid the need to design and run your own complex tender processes for cloud and AI services. Article 39(1) ensures that your compliance obligations under Union public procurement law are met through the Commission's actions, saving significant time, legal resources, and administrative costs.
  2. Access to Sovereign and Innovative Solutions: The Commission's procurement activities are aligned with CADA's goals of promoting European technological sovereignty. This means the available solutions are likely to meet the Union assurance levels and innovation criteria set out in the Act, helping you meet your national cloud and AI strategy objectives without needing to verify every supplier's sovereignty status individually.
  3. Cost Predictability: While you will pay fees for the service, these are structured to cover the Commission's administrative costs. The benefit lies in the potential for lower overall service costs due to the Commission's bulk purchasing power, which can negotiate better prices and terms than individual authorities might achieve. The fees are transparent and calculated to be proportionate.
  4. Participation Requirements: To use this route, your authority must be part of the agreement between the Commission and Member States. You will need to coordinate with your national authorities to ensure your country is a signatory to the central purchasing agreement. Once joined, you can access the platform and participate in future invitations to tender.
  5. Strategic Oversight: Be aware that while you benefit from the Commission's expertise, the strategic direction of procurements is overseen by a Steering Committee. Engaging with your national representative on this committee can help ensure that the procurement agenda aligns with your specific regional or national needs.

Common misconceptions

"The Commission will take over all my procurement decisions." Incorrect. The Commission acts as a central purchasing body for specific activities covered by the agreement. You retain full autonomy over other procurements not covered by this framework. Furthermore, the Steering Committee provides strategic oversight, but the Commission manages the operational aspects. You do not lose control over your entire procurement strategy, only the specific processes you choose to delegate to this central framework.

"It is free to use the Commission's purchasing power." Incorrect. As outlined in Article 40, participating entities must pay fees to cover the Commission's costs. These fees are calculated to ensure the sustainability of the procurement activities and are a core part of the model. However, these fees are designed to be proportionate and are offset by the economies of scale and reduced administrative costs you would otherwise incur by running your own tenders.

"I can join the Commission's framework at any time without restriction." Incorrect. Participation is governed by an agreement between the Commission and Member States. You must be part of a Member State that has signed this agreement. Additionally, while new entities can join dynamic purchasing systems after launch, this requires prior approval from the Commission and is subject to specific conditions, such as not exceeding 50% of the initial estimated quantities of envisaged purchases.

"Using this route exempts me from all national procurement laws." Misleading. Article 39(1) deems you compliant with Union public procurement law when using the Commission's contracts. However, you must still adhere to the terms of the agreement and any specific national rules that apply to your participation in the framework. The deemed compliance is specific to the obligations related to the procurement process itself, which the Commission handles on your behalf. You remain responsible for the actual use of the services and compliance with other national laws.

Related

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