Summary Under the proposed Cloud and AI Development Act (CADA), public procurement of innovative cloud computing services and AI systems would shift from a purely price-driven model to one that explicitly values European technological capacity. As proposed, Article 32 would require contracting authorities to include non-price award criteria evaluating a tenderer's contribution to a European cloud and AI ecosystem — for example using hardware or software designed or manufactured in the EU. Lowest-price awards are not banned, but these "Union added value" criteria must be ancillary, not decisive, and linked to the contract's subject matter, so technical and financial performance remain the primary drivers.

Detail

CADA represents a notable evolution in how the EU approaches public procurement for digital infrastructure. Procurement under the existing Public Procurement Directives often runs on the "most economically advantageous tender" (MEAT) principle, which in practice frequently defaults to lowest price where quality differences are small or hard to quantify. As the explanatory memorandum notes, that horizontal framework cannot adequately address the layers of sovereignty and critical dependencies specific to the cloud sector, which has tended to reinforce reliance on a few large non-EU providers.

CADA would supplement that horizontal acquis with sector-specific measures that use the EU's public buying power to stimulate domestic capability and reduce strategic dependence.

The mechanism: Article 32 and Union added value

The core of the shift is Article 32 ("Union added value"). For procurement of innovative cloud computing services and AI systems, Article 32(1) would require contracting authorities to 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." This is a mandatory inclusion for such procurements, not a voluntary best practice.

To prevent these criteria from becoming disguised protectionism, Article 32(2) sets guardrails. The non-price award criteria must be:

  1. Linked to the subject matter of the contract.
  2. Not conferring unrestricted freedom of choice on the contracting authority.
  3. Expressly set out in the procurement documents or contract notice.
  4. Ancillary and not decisive in the award of the contract.

The phrase "ancillary and not decisive" is critical. Union added value can influence the final score but cannot override core technical or financial performance. A tenderer with superior technical capability and a lower price can still win; the criteria are designed to differentiate otherwise comparable bids by their contribution to the European ecosystem.

What counts as "Union added value"?

Article 32(3) sets out a non-exhaustive list of factors authorities may evaluate. They focus on strengthening the Union's digital technology supply chain and security of supply. Authorities may assess the extent to which a tenderer:

  • (a) Contributes to strengthening the digital technology supply chain in the Union, including the use of software or hardware designed or manufactured in the Union.
  • (b) Has integrated technologies developed in the Union, including R&D results from Union-funded research and development programmes, and makes use of standards, specifications, software, models or other technology developed in the Union.
  • (c) Shows that the innovation required to deliver the service contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem.
  • (d) Delivers the service, to the greatest extent feasible given market availability and technical requirements, through critical computing, storage and networking hardware components designed and/or manufactured in the Union — or, where that is not feasible, through third-country hardware components that still contribute to security of supply and the European ecosystem.

Comparison with traditional lowest-price awards

Under traditional models, especially for standardised cloud services, the lowest price often wins because specifications are rigid and compliance is binary — a dynamic that can disadvantage smaller European providers offering more sovereign or customisable solutions at slightly higher cost. CADA would introduce qualitative, sovereignty-based metrics into the scoring matrix, so buyers assess the strategic impact of the supplier, not only price and basic compliance. A bid using European-designed processors (criterion d) or EU-developed open tooling (criterion b) would earn points a wholly third-country-proprietary bid would not.

CADA does not abolish price competition, however. These criteria are part of the "quality evaluation" that sits alongside financial evaluation, and Article 32(2)(d) makes them "not decisive." The aim is to keep procurement competitive and value-for-money oriented while nudging the market toward European alternatives — turning procurement into a strategic tool for industrial policy aligned with the EU's resilience goals.

Implementation and weighting

Article 32 does not prescribe a specific weighting. The explanatory memorandum suggests that contracting authorities "could consider a maximum weighting of 15 out of 120 points" for European added value within the overall evaluation methodology, to keep it proportionate and subordinate to the core award criteria. The exact weighting will depend on the procurement, but it must be transparent and non-discriminatory.

What this means for you

For public-sector procurement officers, Article 32 would require a rethink of tender documentation and evaluation matrices.

  1. Revise tender documents. Explicitly include non-price award criteria on Union added value in procurements for innovative cloud and AI services. They must be set out expressly in the contract notice or procurement documents (Article 32(2)(c)) — not implicit.
  2. Define evaluation metrics. Develop clear, objective metrics for the factors in Article 32(3). For instance, how will you verify whether hardware is "designed in the Union"? You may need declarations of origin or supply-chain transparency from bidders.
  3. Balance the scorecard. Keep the Union added value criteria "ancillary and not decisive." Over-weighting them risks legal challenge for distorting competition; allocate a modest share of the total score relative to technical performance and price.
  4. Train evaluators. Equip teams to distinguish genuine contributions to the European ecosystem from superficial claims, including the nuances of hardware design versus manufacturing and the integration of EU-funded R&D (Article 32(3)).
  5. Watch SME participation. CADA emphasises SMEs: Article 33 requires Member States to monitor and report on procurement of innovation and SME participation, and to pursue an objective of at least 25% of cloud and AI procurement going to innovative SMEs (Article 33(4)). Make sure your added-value criteria do not inadvertently exclude smaller European providers.

Common misconceptions

"CADA mandates buying only European products." Incorrect. Article 32 does not impose a strict "buy European" rule. It introduces criteria to evaluate a contribution to the European ecosystem. A non-European provider can still win if it demonstrates that contribution (for example through open standards or EU collaboration). The criteria are evaluative, not exclusionary.

"Union added value can override technical inferiority." No. Article 32(2)(d) states these criteria are "not decisive." Technical and financial criteria remain paramount. A significantly inferior or prohibitively expensive European bid should not be propped up by an added-value score. The goal is to differentiate comparable bids, not to force adoption of substandard technology.

"This applies to all public procurement." No. Article 32 targets "innovative cloud computing services and AI systems." It does not apply to office supplies, construction or other non-digital sectors. It is a sector-specific measure for the cloud and AI market.

"It replaces lowest-price awards entirely." Lowest-price awards are not banned, but for innovative cloud and AI procurements you must include quality-evaluation criteria. The thrust of CADA is to move away from pure price competition toward a more holistic evaluation that includes strategic autonomy.

Related

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