What counts as a public sector body for EuroCloud Federation membership under CADA?

Under the proposed Cloud and AI Development Act (CADA), membership in the EuroCloud Federation is open to Union entities and public sector bodies on a volu

Summary Under the proposed Cloud and AI Development Act (CADA), membership in the EuroCloud Federation is open to Union entities and public sector bodies on a voluntary basis. The term "public sector body" is not defined anew in CADA but cross-references Article 2, point (1), of Directive (EU) 2019/1024 (the Open Data Directive). This definition encompasses the State, regional, and local authorities, as well as bodies governed by public law established to meet needs in the general interest without an industrial or commercial character. Crucially, publicly owned companies operating commercially are excluded from membership, though they may supply services to members.

Detail

The EuroCloud Federation, established by Article 34 of the CADA proposal (COM(2026) 502 final), is designed to facilitate the sharing of data centre services and cloud computing services among public bodies across the Union. To ensure the Federation remains a tool for public-interest cooperation rather than a commercial marketplace, the Act strictly defines who may participate.

The Legal Definition of a Public Sector Body

Article 34(1) states that the Federation "shall be open for the participation of Union entities and public sector bodies on a voluntary basis." To determine eligibility, one must look to Article 2 of the CADA proposal, specifically point (6), which defines "public sector body" by reference to Article 2, point (1), of Directive (EU) 2019/1024.

This cross-reference imports a well-established EU legal definition that covers three distinct categories:

The State, Regional, or Local Authorities: This includes central government ministries, regional administrations, and municipal councils.
Bodies Governed by Public Law: These are entities established specifically to meet needs in the general interest, provided they do not have an industrial or commercial character.
Associations: Associations formed by one or more of the authorities or bodies mentioned above.

The "Non-Commercial" Criterion

The most critical filter for membership is the exclusion of entities with an industrial or commercial character. Under the referenced Directive, a body is considered to have such a character if it operates in a market environment, competing with private operators, or if it is financed primarily through commercial activities rather than public funds.

Consequently, a state-owned enterprise that sells cloud services to private companies, or a municipal utility that competes in the energy market, would likely not qualify as a "public sector body" for EuroCloud Federation membership. The Federation is intended for the sharing of capacity between public administrations, not for commercial vendors to join a consortium.

Voluntary Nature and Procedural Requirements

Participation is explicitly voluntary. Article 34(1) uses the phrasing "may request the Commission to join," indicating no mandatory obligation for Member States to enrol their authorities. However, once a body decides to join, it must follow specific procedures. Article 34(4) empowers the Commission to adopt implementing acts to specify the procedure for participation and the template for the request. This ensures a standardized onboarding process for all national, regional, and local authorities seeking to share or access capacity.

Distinction from Union Entities

While both categories can join, they remain legally distinct. Union entities (defined in Article 2, point (7)) refer to EU institutions, bodies, offices, and agencies (e.g., the European Commission, Europol, the European Central Bank). Public sector bodies refer to entities within the Member States. The Federation bridges these two levels, allowing a French regional council to share capacity with the European Commission, provided both meet the respective definitions.

What this means for you

For public sector IT leaders, procurement officers, and legal counsels, understanding this definition is the first step in determining eligibility for the EuroCloud Federation.

Conduct a Status Check: Verify whether your organisation falls under the Directive (EU) 2019/1024 definition. If your entity is a "body governed by public law," assess whether it has an industrial or commercial character. If it competes in the market, it is likely ineligible for membership, even if state-owned.
Prepare for the Application Process: If your organisation qualifies, monitor the Commission's implementing acts under Article 34(4) for the specific application template. You will need to formally request to join the Federation.
Understand the Cost Model: Once a member, you can share services with other members. Article 35(5) clarifies that any fees charged must be strictly limited to recovering the costs incurred by the sharing entity (e.g., for isolating resources or managing access). These fees do not constitute a "pecuniary interest," meaning the sharing arrangement does not fall under standard public procurement rules. This allows for agile capacity sharing without triggering full tender procedures.
Ensure Compliance: As a member, you must adhere to the technical, operational, and organisational measures required by Article 35(2). This includes implementing policies on risk analysis, information system security, and incident handling to ensure the Federation remains secure and resilient.

Common misconceptions

"Any government-owned company can join the Federation." Correction: No. The definition explicitly excludes bodies with an industrial or commercial character. If your entity operates commercially (e.g., a state-owned telecom or a municipal energy provider selling to the open market), it is likely a "provider" rather than a "public sector body" eligible for membership. The Federation is for public bodies sharing capacity, not for commercial vendors.

"Membership is mandatory for all public authorities." Correction: Article 34(1) states participation is on a voluntary basis. Member States and their public bodies are not forced to join. However, the CADA proposal encourages the uptake of sovereign and shared cloud services to reduce dependency on third-country providers.

"Private sector entities can join the Federation." Correction: The EuroCloud Federation is strictly for Union entities and public sector bodies. Private sector entities, including cloud service providers, cannot be members. They may, however, provide services to members if those services meet the sovereignty and assurance levels required by CADA's risk assessments (Article 29).

"Joining the Federation requires a new public procurement process." Correction: Sharing services within the Federation is not a public procurement contract. Article 35(5) states that fees are limited to cost recovery and do not constitute a pecuniary interest. Therefore, the sharing of services between members does not fall under standard public procurement rules, provided the conditions of Article 35 are met.

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