Summary Under the proposed Cloud and AI Development Act (CADA), a "sharing entity" within the EuroCloud Federation may charge a "using entity" a fee, but this fee is strictly limited to the additional costs incurred in making the service available. As proposed in Article 35(5), these charges must not constitute a "pecuniary interest" under Directive 2014/24/EU or Regulation (EU, Euratom) 2024/2509. This ensures the arrangement remains a form of public-sector cooperation rather than a commercial contract, thereby exempting it from standard public procurement procedures.

Detail

The EuroCloud Federation, established under Article 34 of the proposed CADA (COM(2026) 502 final), is designed to facilitate the voluntary sharing of public sector data centre services and cloud computing services between Union entities and public sector bodies. A foundational principle of this federation is that it operates as a form of public-sector cooperation governed solely by considerations of public interest, rather than as a market transaction. Consequently, the financial arrangements between members are tightly regulated to ensure they do not distort competition or trigger complex public procurement obligations.

The Strict Cost-Recovery Principle

Article 35(5) of the proposal explicitly addresses the financial relationship between the sharing entity (the provider of the capacity) and the using entity (the recipient). It states that a sharing entity "may charge a fee to the using entity." However, this permission is immediately constrained by a strict cap: the amount of the fee "shall be limited to the costs that the sharing entity incurs in relation to the sharing of the service."

This establishes a pure cost-recovery mechanism. The sharing entity is not permitted to make a profit from the transaction, nor can it charge a market-rate price that includes a margin for commercial gain. The proposal further clarifies that these recoverable costs are limited to the additional costs incurred specifically in the sharing of capacity. These costs may include expenses related to:

  • Allocating and isolating resources for the using entity.
  • Managing access and enabling the integration and interoperability of resources.
  • Ensuring compliance with applicable Union law requirements.
  • Managing the sharing relationship itself.

Crucially, the text excludes general fixed costs that would be incurred by the sharing entity regardless of whether the service is shared. The fee must reflect only the incremental burden created by the specific act of sharing.

Exclusion from Public Procurement Rules

A critical legal consequence of this cost-based fee structure is its impact on the applicability of public procurement law. Recital 73 and Article 35(5) specify that fees levied by the sharing entity to recover these costs "shall not be deemed as a consideration for the provision of a service." Furthermore, they "shall not constitute a pecuniary interest or public contract" within the meaning of Directive 2014/24/EU (the Public Procurement Directive) and Regulation (EU, Euratom) 2024/2509 (the Financial Regulation).

Because the fee does not constitute a pecuniary interest, the sharing of services within the EuroCloud Federation does not fall under standard Union public procurement rules. This distinction is vital for public authorities, as it allows for the pooling of resources and the use of idle capacity without the administrative burden of launching formal tender procedures for every instance of shared capacity. The arrangement is treated as an in-house provision or a public-sector cooperation, provided the conditions of Article 35 are met. If the fee were to exceed these costs or include a profit element, it would likely be reclassified as a public contract, requiring full compliance with procurement directives.

Distinction from Administrative Fees

It is essential to distinguish between the fees charged between sharing and using entities for specific services, and the administrative fees for participating in the Federation itself. Article 36 establishes that the costs arising from the activities carried out by the Commission to administer the EuroCloud Federation (including maintaining the platform and assessing membership requests) shall be jointly financed by the members through fees levied by the Commission.

These administrative fees are separate from the service-sharing fees described in Article 35. While Article 35 fees are bilateral and based on actual additional costs, Article 36 fees are levied by the Commission to cover the operational costs of the Federation's governance and technical platform. Both fee streams are designed to be cost-recovery mechanisms, but they serve different purposes and are governed by different articles.

What this means for you

For public-sector procurement officers, IT managers, and financial controllers, the fee structure in the EuroCloud Federation offers a pathway to access sovereign cloud capacity without engaging in traditional, often lengthy, procurement processes. However, it requires rigorous cost tracking, transparent accounting, and strict adherence to the "additional costs" principle.

1. Verify the "Additional Costs" Basis When negotiating with a sharing entity, you must ensure that the quoted fee reflects only the incremental costs of providing the service to your entity. The sharing entity cannot pass on its general overheads, fixed infrastructure costs, or costs that exist regardless of your usage, unless those costs are directly attributable to the sharing arrangement. You should request a detailed breakdown of how the fee was calculated to ensure it aligns with the "additional costs" principle outlined in Article 35(5).

2. Avoid Creating a Pecuniary Interest If the fee includes a profit margin, a significant risk premium, or covers costs unrelated to the specific sharing arrangement, it may be deemed a "pecuniary interest." This would reclassify the transaction as a public contract, triggering the full application of Directive 2014/24/EU. This could invalidate the arrangement if proper procurement procedures were not followed. Ensure that the contractual documentation explicitly states that the fee is for cost recovery only and does not constitute a commercial consideration.

3. Budget for Two Types of Fees While the service-sharing fees are bilateral between the entities, remember that your organization will also need to pay administrative fees to the Commission for participating in the EuroCloud Federation, as per Article 36. These fees are determined by the Commission via implementing acts and are based on the estimated costs of running the Federation's platform and governance. Ensure your budget accounts for both the direct service costs from the sharing entity and the administrative membership fees to the Commission.

4. Monitor for Cost Changes Since fees are tied to actual costs, they may fluctuate based on the specific resources allocated or the complexity of the integration. The sharing entity should be transparent about any changes in the cost base that would affect the fee. As a using entity, you have the right to understand the basis of these costs to ensure compliance with the CADA framework and to verify that the fee remains within the legal limits.

Common misconceptions

Misconception 1: The EuroCloud Federation is a free service. While the sharing of services is not a commercial transaction, it is not necessarily free of charge. Article 35(5) allows sharing entities to charge fees to recover their additional costs. The "free" aspect refers to the absence of a profit motive and the exemption from procurement rules, not the absence of cost recovery.

Misconception 2: Any fee charged between public entities is exempt from procurement rules. This is incorrect. The exemption from public procurement rules applies only if the fee does not constitute a pecuniary interest. If a public entity charges a fee that exceeds the additional costs of providing the service, or if the arrangement is structured as a commercial service, it will likely fall back under the standard public procurement directives. The cost-recovery limit is the legal boundary that preserves the exemption.

Misconception 3: The sharing entity can charge for its entire infrastructure costs. The fee is limited to the additional costs incurred in the sharing of capacity. A sharing entity cannot simply divide its total annual infrastructure budget by the number of using entities and charge each one a proportional share, unless those costs are genuinely incremental and attributable to the specific sharing arrangement. General fixed costs that would be incurred anyway are generally not recoverable under this specific framework.

Misconception 4: The Commission sets the fees for shared services. The Commission does not set the fees for the specific cloud or data centre services shared between entities. Those fees are determined by the sharing entity based on its actual additional costs, subject to the limits in Article 35. The Commission only sets the administrative fees for participating in the Federation itself (Article 36) and establishes the platform and governance rules.

Related

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