Summary The proposed Cloud and AI Development Act (CADA) creates two distinct pathways for public-sector buyers to access cloud and data centre services. First, the EuroCloud Federation (Articles 34–36) enables voluntary sharing of existing public-sector capacity between Member States and Union entities at strictly cost-recovery rates, bypassing standard procurement rules. Second, Commission-led central procurement (Articles 37–40) allows the Commission to act as a central purchasing body to buy commercial cloud services on behalf of public bodies, leveraging collective bargaining power. Public buyers must choose between sharing internal assets or pooling demand to purchase external services; these mechanisms are complementary, not mutually exclusive.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, addresses the fragmentation of the EU cloud market by establishing two parallel demand-side mechanisms. While both aim to improve efficiency and resilience, they operate on fundamentally different legal and economic principles: one facilitates the sharing of public assets, while the other facilitates the collective purchase of commercial services.

Pathway 1: The EuroCloud Federation (Sharing Public Capacity)

The EuroCloud Federation is a voluntary framework established under Article 34 to facilitate the sharing of public-sector data centre services and cloud computing services. Its primary objective is to optimise the use of existing public infrastructure by allowing Member States and Union entities to access idle capacity from one another.

Voluntary Access and the Catalogue Participation is strictly voluntary. Article 34(1) states that the Federation is "open for the participation of Union entities and public sector bodies on a voluntary basis." Entities wishing to join must request participation from the Commission. To enable this, the Commission is mandated to establish a platform comprising:

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

The "Sharing Entity" and Ownership Rules Not every public body can automatically share services. Article 35(1) imposes strict ownership criteria. A member (the "sharing entity") may only share services if it directly, or indirectly through an intermediate legal entity, owns the hardware through which the service is made available. If an intermediate entity is used, the sharing entity must exercise "control" over it. The proposal defines this control cumulatively:

  1. The sharing entity exercises decisive influence over strategic objectives and significant decisions.
  2. There is no direct private capital participation in the intermediate entity.
  3. More than 80% of the intermediate entity's activities are performed for the sharing entity.

Cost Recovery, Not Profit The economic model of the Federation is designed to prevent market distortion. Article 35(5) explicitly permits the sharing entity to charge a fee to the "using entity," but this fee is capped. It must be "limited strictly to the costs that the sharing entity incurs in relation to the sharing of the service." The text clarifies that these fees "shall not constitute a pecuniary interest within the meaning of Article 2 of Directive 2014/24/EU."

Because the transaction is based on public-sector cooperation and limited to cost recovery, Article 35(7) states that sharing within the Federation "shall not fall under Union public procurement rules." This allows public bodies to bypass complex tendering procedures when swapping or sharing capacity, provided the fees cover only:

  • Allocating and isolating resources.
  • Managing access and ensuring interoperability.
  • Ensuring compliance with Union law.
  • Managing the sharing relationship.

Pathway 2: Commission Central Procurement (Buying Commercial Services)

While the Federation focuses on internal sharing, Articles 37–39 establish a mechanism for the Commission to act as a central purchasing body to acquire commercial cloud services. This pathway is designed to leverage the collective buying power of the EU to negotiate better terms with commercial providers.

The Commission as a Central Purchaser Under Article 37, the Commission may carry out procurement activities for Union entities, contracting authorities of Member States, and selected partner organisations. The Commission can:

  • Procure data centre services, cloud computing services, software, and AI systems on behalf of participating entities.
  • Conclude framework contracts or operate dynamic purchasing systems.
  • Act as a "wholesaler" by acquiring services and reselling them to participating entities.

Governance and Strategic Oversight This mechanism is governed by an agreement between the Commission and at least two Member States, as detailed in Article 38. A Steering Committee, composed of the Commission and representatives of participating Member States, provides strategic oversight of the procurement agenda. However, the Commission retains operational responsibility for launching procedures and awarding contracts.

Fees for Central Procurement Unlike the Federation's cost-recovery model for sharing, central procurement involves fees to cover the Commission's operational costs. Article 40 stipulates that costs arising from these activities are jointly financed by participating entities through fees levied by the Commission. These fees must be "sufficient to cover those costs" and reflect practices of comparable procurement frameworks. The revenue generated constitutes internal assigned revenues, used to cover the costs of the procurement activities.

Procurement Compliance A key benefit of this pathway is legal certainty. Article 39(1) states that a participating entity is "deemed to have fulfilled its obligations under applicable Union public procurement law" when it acquires services through the Commission's framework. This simplifies compliance for national authorities that might otherwise struggle with cross-border tendering rules.

What this means for you

For public-sector procurement officers and IT directors, the CADA proposal offers a strategic fork in the road. The choice depends on whether your organisation has surplus capacity to share or a need for commercial services that require collective bargaining.

1. If You Have Surplus Capacity: Join the EuroCloud Federation

If your public body operates data centres or cloud infrastructure with underutilised capacity, the EuroCloud Federation offers a unique opportunity to monetise these assets without triggering full-scale procurement procedures.

  • Action: Audit your infrastructure to identify spare capacity. Verify that you meet the strict ownership criteria in Article 35(1) (i.e., you own the hardware or control the entity that does).
  • Benefit: You can recover maintenance and operational costs by sharing with other public bodies. Because the fees are limited to cost recovery, the transaction is exempt from standard public procurement rules, significantly reducing administrative burden.
  • Constraint: You must demonstrate to the Commission that you have the necessary technical, operational, and organisational measures in place to ensure secure and resilient sharing before your services can be listed in the Federation's catalogue.

2. If You Need Commercial Services: Use Commission Procurement

If your organisation lacks sufficient in-house capacity or requires specialised commercial cloud services (e.g., high-performance computing from a hyperscaler), the Commission's central procurement framework is the preferred route.

  • Action: Engage with your national authorities to confirm if your Member State has signed the agreement with the Commission under Article 38.
  • Benefit: You gain access to pre-negotiated framework contracts and dynamic purchasing systems. This leverages the EU's collective market weight to secure better pricing and terms than you could achieve individually.
  • Constraint: You will be required to pay fees to the Commission to cover the operational costs of the procurement service, as outlined in Article 40.

3. Strategic Decision: Share vs. Buy

The two mechanisms are not mutually exclusive. A public body could simultaneously share its idle storage capacity via the Federation while procuring AI training compute via the Commission's central framework.

  • Choose Sharing when you have existing, compliant public assets and want to avoid the complexity of tendering.
  • Choose Procurement when you need capabilities that do not exist within the public sector or when the administrative burden of individual tendering outweighs the cost of the Commission's fees.

Common misconceptions

Misconception 1: The EuroCloud Federation is a mandatory pool for all public clouds.

  • Fact: Participation is strictly voluntary. Article 34(1) explicitly states that Union entities and public-sector bodies may "request" to join. There is no obligation to participate, and public bodies remain free to procure services commercially or through national frameworks if they choose not to join.

Misconception 2: Sharing services via the EuroCloud Federation allows for profit.

  • Fact: The framework is designed for cost recovery only. Article 35(5) limits fees strictly to the costs incurred. The text clarifies that these fees "shall not constitute a pecuniary interest." Charging above cost-recovery levels would violate the framework and likely trigger standard public procurement rules.

Misconception 3: The Commission's central procurement replaces national procurement entirely.

  • Fact: The Commission's procurement activities under Article 37 are an additional option, not a replacement. Public bodies retain the right to use their national procurement procedures. The Commission's role is to provide a centralised alternative for those who wish to leverage collective buying power.

Misconception 4: Any public body can automatically share hardware via the Federation.

  • Fact: There are strict ownership and control requirements. Article 35(1) requires that the sharing entity directly or indirectly owns the hardware. If the hardware is owned by an intermediate legal entity, the sharing entity must exercise "control" (decisive influence, no private capital, >80% activity for the entity). Mere contractual use of a service is insufficient; ownership or control of the underlying hardware is mandatory.

Misconception 5: The Federation and Commission Procurement are the same thing.

  • Fact: They are legally and economically distinct. The Federation is a sharing mechanism for public assets (cost-recovery, no procurement rules). Commission Procurement is a buying mechanism for commercial services (fees for service, deemed compliance with procurement rules).

Related

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