Summary The EuroCloud Federation is a proposed EU-wide mechanism designed to allow public sector bodies and Union entities to share their idle data centre and cloud computing capacity. As proposed in Article 34(2) of the Cloud and AI Development Act (CADA), it facilitates the sharing of public sector data centre services and cloud computing services between Union entities and public sector bodies, under the specific conditions set out in Articles 35 and 36. This initiative aims to increase the efficiency of public spending, reduce reliance on external commercial providers, and strengthen the EU's technological sovereignty by pooling existing public resources.

Detail

The EuroCloud Federation represents a strategic shift in how the European public sector manages its digital infrastructure. Rather than every Member State or Union entity investing in redundant, isolated data centres, the Federation creates a structured, voluntary environment for cooperation. This approach is central to the CADA proposal's goal of optimizing existing assets to meet the growing demand for compute capacity driven by AI and digital transformation.

Establishment and Core Purpose The legal foundation for this initiative is Article 34(1) of the CADA proposal, which establishes the European public sector cloud federation (the 'EuroCloud Federation'). Participation is voluntary for Union entities and public sector bodies, who may request the Commission to join. The primary operational mandate is defined in Article 34(2): the Federation "shall facilitate the sharing of public sector data centre services and cloud computing services between Union entities and public sector bodies."

Crucially, this sharing is not an open market mechanism. It is a controlled form of public-sector cooperation governed strictly by the conditions laid out in Articles 35 and 36. These articles ensure that the sharing remains within the public domain, maintains security standards, and adheres to specific financial rules that distinguish it from commercial transactions.

The EuroCloud Platform: The Technical Enabler To make this sharing operational, the Commission is tasked with establishing a dedicated digital infrastructure under Article 34(3). This "EuroCloud Platform" serves two distinct but complementary functions:

  1. A Catalogue: It provides a centralized inventory of available public sector data centre services and cloud computing services. This allows potential "using entities" to identify idle capacity available for sharing across the Union.
  2. A Service Platform: It enables the actual exchange and orchestration of computing, storage, and network resources. This technical layer ensures that resources from one Member State or Union entity can be securely and efficiently utilized by another, handling the complexity of interoperability and resource allocation.

Who Can Participate and Share? Participation is strictly limited to public entities to ensure the Federation remains a tool for public sovereignty. Article 35(1) specifies the eligibility criteria for the "sharing entity" (the provider of the capacity). A member may share services with another member (the "using entity") only where the sharing entity directly, or indirectly through an intermediate legal entity, owns the hardware through which the service is made available.

This ownership requirement is critical. It ensures that the shared capacity is genuinely based on public assets. Furthermore, Recital 71 of the proposal clarifies that direct private participation is excluded. If an intermediate legal entity is used, the public sharing entity must exercise decisive influence over it, and there must be no direct private capital participation. This structure prevents private vendors from using the Federation as a backdoor to sell services to the public sector, preserving the initiative's focus on public asset utilization.

Financial and Legal Framework: Exemption from Procurement Rules One of the most significant features of the EuroCloud Federation is its unique legal status regarding public procurement. Article 35(5) states that a sharing entity may charge a fee to the using entity, but this amount must be limited strictly to the costs incurred in relation to the sharing of the service. These costs include allocating and isolating resources, managing access, enabling integration, and ensuring compliance with Union law.

Crucially, the proposal explicitly states that these fees "shall not constitute a pecuniary interest" within the meaning of Directive 2014/24/EU and the Financial Regulation. Consequently, the sharing of services within the EuroCloud Federation does not fall under Union public procurement rules. This exemption is designed to remove administrative barriers, allowing public bodies to access shared capacity quickly without the lengthy tendering processes required for commercial contracts.

However, the administration of the Federation itself is not free. Article 36 establishes that the costs arising from the Commission's activities—such as maintaining the platform, assessing membership applications, and managing the federation—are jointly financed by the members through fees levied by the Commission. These revenues constitute "internal assigned revenues" for the Union budget, ensuring the mechanism is self-sustaining.

Security and Governance Before any sharing can occur, strict security and operational standards must be met. Article 35(2) requires the sharing entity to put in place appropriate technical, operational, and organizational measures to ensure effective, secure, and resilient provision of services. Under Article 35(3) and (4), the sharing entity must demonstrate to the Commission that it fulfills these conditions. The Commission then assesses this information and only allows the sharing to proceed if the conditions are met. This gatekeeping role ensures that the Federation does not become a vector for security risks, maintaining the high standards expected of public sector infrastructure.

What this means for you

For public-sector procurement officers, IT directors, and policy makers, the EuroCloud Federation represents a paradigm shift from solely purchasing commercial cloud services to leveraging a cooperative public infrastructure.

  1. Unlocking Idle Capacity: If your organization operates a data centre with unused capacity, the Federation provides a legal pathway to share this resource with other public bodies. This transforms idle assets into a strategic resource, potentially generating revenue to offset operational costs (strictly on a cost-recovery basis) while contributing to EU-wide efficiency.
  2. Accessing Sovereign Compute: If your organization requires additional compute capacity, you can access it from other public bodies without navigating complex international procurement procedures for commercial vendors. This is particularly valuable for projects requiring high levels of data sovereignty or those sensitive to third-country dependencies.
  3. Simplified Administrative Burden: Because the sharing within the Federation is exempt from standard public procurement rules (provided the fee covers only costs), you can access these resources more quickly and with significantly less administrative overhead than a traditional tender. This agility is crucial for responding to emerging needs in crisis management or rapid digital transformation.
  4. Enhanced Sovereignty and Security: By using the EuroCloud Federation, you are utilizing infrastructure owned and controlled by public entities within the EU. This aligns with CADA's broader goals of reducing dependency on non-EU providers and ensuring that sensitive public data remains under EU jurisdiction and control, free from extraterritorial third-country laws.
  5. Voluntary but Regulated: Joining the Federation is voluntary; you can request the Commission to join, but you are not forced to participate. However, if you do join, you must comply with the rigorous technical and security standards required by the Commission to ensure the integrity of the shared environment.

Common misconceptions

Misconception 1: The EuroCloud Federation is a new public cloud provider. It is not a new service provider in the commercial sense, nor does it build new data centres. Instead, it is a coordination mechanism and a digital platform that allows existing public data centres and cloud resources to be shared and utilized more efficiently across borders and administrative levels. It aggregates what already exists rather than creating new infrastructure from scratch.

Misconception 2: Any public body can join immediately without checks. While participation is voluntary, it is not automatic. As per Article 35(3) and (4), a sharing entity must demonstrate to the Commission that it fulfills specific security and operational conditions before it can share services. The Commission assesses this information and allows the sharing only if the conditions are fulfilled. This ensures that only secure and compliant entities participate.

Misconception 3: Private cloud providers can sell services through the EuroCloud Federation. No. Article 35(1) and Recital 71 clarify that participation is limited to public entities. Direct private participation is excluded. The sharing entity must own the hardware (directly or through a controlled intermediate legal entity). This ensures the Federation remains a tool for public-sector cooperation and sovereignty, not a marketplace for private vendors to bypass procurement rules.

Misconception 4: Sharing services is free of charge. While the sharing is not a commercial transaction and is exempt from procurement rules, it is not necessarily free. Article 35(5) allows the sharing entity to charge a fee to recover the costs incurred in sharing the service (e.g., allocating resources, managing access, ensuring compliance). However, this fee cannot generate a profit; it is strictly cost-recovery. Additionally, members pay fees to the Commission to cover the administrative costs of running the Federation itself (Article 36).

Misconception 5: The Federation replaces national cloud strategies. The Federation is a complementary mechanism, not a replacement. It operates alongside national strategies and existing national cloud initiatives. Its purpose is to facilitate cross-border sharing and optimize capacity where national boundaries might otherwise limit efficiency, without undermining national sovereignty or existing national infrastructure investments.

Related

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