Summary The EuroCloud Federation, as proposed under the Cloud and AI Development Act (CADA), offers public-sector bodies a voluntary mechanism to share cloud and data centre capacity across the EU. Key benefits include access to a centralised catalogue of sovereign services, the ability to utilize spare capacity at strict cost-recovery rates (avoiding commercial markups), and the pooling of secure, high-assurance capabilities to reduce dependence on third-country providers. This framework simplifies cross-border sharing while ensuring compliance with public procurement rules.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, establishes the European public sector cloud federation (the "EuroCloud Federation") under Article 34. This initiative is designed to strengthen Europe's technological sovereignty by enabling Union institutions, bodies, offices, and agencies, as well as public sector bodies from Member States, to interconnect their cloud computing infrastructures.

For public-sector procurement officers, IT directors, and strategic planners, the EuroCloud Federation offers distinct advantages rooted in the text of the proposal. These benefits address critical challenges such as budget constraints, vendor lock-in, and the high cost of achieving sovereign cloud compliance.

1. Access to a Centralised Catalogue of Sovereign Services

One of the immediate practical benefits for members is access to a unified marketplace of available resources. Under Article 34(3), the Commission is mandated to establish a platform for the EuroCloud Federation that provides:

  • A catalogue providing information on available public sector data centre services and cloud computing services.
  • A service platform for the exchange and orchestration of computing, storage, and network resources and services.

This catalogue simplifies the procurement process significantly. Instead of conducting separate, complex tender procedures for every cloud requirement, public bodies can identify available sovereign capacity from other Member States or Union entities. This visibility promotes the use of European providers and helps ensure that public funds are directed toward services that meet the Union's assurance levels for sovereignty and security. By centralising this information, the Federation reduces information asymmetry and accelerates the deployment of trusted cloud solutions.

2. Utilization of Spare Capacity at Strict Cost Recovery

A significant financial benefit of the EuroCloud Federation is the mechanism for sharing idle or spare capacity. Many public sector entities operate data centres or cloud infrastructure that are not utilized at 100% capacity at all times. Article 35 allows a "sharing entity" (a member that owns the hardware) to share these services with a "using entity" (another member).

Crucially, this sharing is not a commercial transaction in the traditional sense. Article 35(5) states that the sharing entity may charge a fee to the using entity, but this fee is strictly limited to the costs incurred in relation to the sharing of the service. These costs are explicitly defined to include:

  • Allocating and isolating resources.
  • Managing access.
  • Enabling integration and interoperability of resources.
  • Ensuring compliance with applicable requirements under Union law.
  • Managing the sharing relationship.

Because these fees are limited to cost recovery and do not constitute a "pecuniary interest" within the meaning of Directive 2014/24/EU and Regulation (EU, Euratom) 2024/2509, this arrangement bypasses the need for standard competitive procurement procedures (Recital 73). This allows public bodies to access additional computing power at a fraction of the market price, avoiding the premium often associated with third-country hyperscalers or commercial cloud providers. The framework ensures that the sharing is "free of charge, except where the charges are limited strictly to what is necessary and proportionate to recover the costs."

3. Pooling Sovereign Capabilities Across Member States

The EuroCloud Federation enables the pooling of sovereign capabilities. By connecting national and European cloud initiatives, the Federation facilitates the deployment of a secure and interoperable European public-sector cloud. This is particularly beneficial for smaller Member States or specific public bodies that may lack the scale to negotiate favorable terms with providers or to build their own high-assurance infrastructure independently.

By joining the Federation, entities contribute to a larger, more resilient European cloud ecosystem. This collective approach helps achieve the Union's strategic objective of reducing critical dependencies on non-European cloud providers, as highlighted in the Explanatory Memorandum. It ensures that sensitive public data and critical infrastructure remain under the jurisdiction and control of the Union, mitigating risks associated with extraterritorial data access laws. The Federation brings together national and European cloud initiatives that provide "highly trusted and secure public-sector cloud capabilities," allowing for the sharing of such capabilities between Union entities and public-sector bodies.

4. Simplified Administrative and Legal Framework

Participating in the EuroCloud Federation simplifies the legal and administrative burden of cross-border cloud sharing. The framework established by CADA provides a clear legal basis for these exchanges, ensuring that they comply with public procurement rules. The sharing of services is governed solely by considerations of public interest and does not entail any form of consideration in exchange for another service, other than the strict cost-recovery fees mentioned above.

Furthermore, the Federation is supported by the Commission, which will establish and manage the platform. This reduces the administrative overhead for individual Member States, as they do not need to build their own bilateral sharing mechanisms. The Commission will also cover the initial establishment costs, which may be reimbursed by members over a period not exceeding three years (Article 36). The costs arising from the activities carried out by the Commission pursuant to this Chapter shall be jointly financed by the members through fees levied by the Commission, ensuring a sustainable operational model.

What this means for you

For public-sector procurement officers and IT directors, the EuroCloud Federation presents a strategic opportunity to optimize cloud spending and enhance security. Here is how you can leverage these benefits:

  • Reduce Procurement Complexity: Instead of launching new tenders for every cloud requirement, check the EuroCloud Federation catalogue first. If a Member State or Union entity has spare sovereign capacity that meets your assurance level requirements, you can access it directly through the Federation's platform. This avoids the lengthy and costly process of full-scale public procurement for standard capacity needs.
  • Lower Costs: By utilizing spare capacity from other public bodies, you can avoid the high costs associated with commercial cloud providers. Since fees are limited to cost recovery, this can result in significant savings for your organization. The fees are calculated to cover only the additional costs incurred in the sharing of capacity, ensuring no profit is made on the transaction.
  • Enhance Sovereignty Compliance: If your organization is required to use cloud services with a specific Union assurance level (e.g., Level 2, 3, or 4) due to risk assessments under Article 29, the EuroCloud Federation provides a pool of pre-vetted, sovereign-compliant services. This simplifies compliance with CADA's sovereignty framework by offering a trusted source of services that have already been assessed for their alignment with Union assurance levels.
  • Participate Voluntarily: Membership is voluntary (Article 34(1)). You can request the Commission to join the Federation when you are ready. This allows you to assess your internal capacity and needs before committing to the sharing framework. The Federation is open for participation on a voluntary basis, allowing entities to join when it aligns with their strategic goals.

Common misconceptions

"Membership is mandatory." No. Participation in the EuroCloud Federation is voluntary. Article 34(1) explicitly states that the Federation is "open for the participation of Union entities and public sector bodies on a voluntary basis." Union entities and public sector bodies may request the Commission to join, but they are not forced to do so.

"Private companies can join the Federation." No. The EuroCloud Federation is limited to public entities. Direct private participation is excluded. While private providers may own the hardware used by a public member, the sharing entity must be a public body that owns or controls the hardware through an intermediate legal entity under strict conditions (Article 35(1) and Recital 71). Specifically, the sharing entity must exercise decisive influence over the intermediate entity, there must be no direct private capital participation, and more than 80% of the intermediate entity's activities must be carried out in the performance of tasks entrusted to it by the sharing entity.

"Sharing services is a commercial transaction." No. The sharing of services within the Federation is not a commercial sale. Fees are strictly limited to cost recovery and do not constitute a pecuniary interest. Therefore, standard public procurement rules do not apply to these specific exchanges (Recital 73). The fees are limited to the additional costs incurred in the sharing of capacity, including for allocating and isolating resources, managing access, enabling the integration and interoperability of resources, ensuring compliance with the applicable requirements under Union law and managing the sharing relationship.

"The Federation replaces national cloud strategies." No. The EuroCloud Federation complements national strategies. It facilitates the sharing of capabilities between Member States but does not replace the need for national cloud and AI strategies, which must still be adopted by Member States under Article 7 of CADA. The Federation is an additional tool to enhance the efficiency and sovereignty of public cloud usage, working in tandem with national-level planning.

Related

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