What implementing acts govern CADA procurement fees?

Under the proposed Cloud and AI Development Act (CADA), the European Commission would adopt implementing acts to govern the practical arrangements for fees

Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission would adopt implementing acts to govern the practical arrangements for fees charged for common procurement activities. These acts, adopted via the examination procedure under Article 46(2), would specify estimated costs, individual fee amounts, and payment conditions. This framework ensures that participating contracting authorities contribute proportionately to the operational costs of the Commission's joint procurement services, with initial establishment costs potentially reimbursed from the Union budget over a period not exceeding three years.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, establishes a mechanism for the European Commission to act as a central purchasing body for cloud computing services, data centre services, software, and AI systems on behalf of Member States' contracting authorities and other participating entities. To ensure the financial sustainability of this framework without relying on the general Union budget for ongoing operations, CADA introduces a fee-based model. The governance of these fees is primarily detailed in Article 40 of the proposal, which delegates specific rule-making powers to the Commission.

The Legal Basis for Implementing Acts

CADA does not set fixed fee amounts in the primary legislation. Instead, it empowers the Commission to adopt implementing acts to define the specific financial mechanics. According to Article 40(5), the Commission is empowered to lay down detailed rules for determining the fees. These implementing acts must explicitly specify:

(a) the estimated costs attributable to the procurement activities for which fees are chargeable;
(b) the individual amounts of the chargeable fees;
(c) the manner and conditions under which the fees are to be paid;
(d) the conditions under which the fees are to be paid.

These implementing acts are not discretionary administrative notices; they are legally binding measures adopted in accordance with the examination procedure referred to in Article 46(2) of the Regulation. This procedure ensures that the European Parliament and the Council have oversight, and that a committee of Member State representatives can scrutinise the proposed fee structures before they are finalised. This is a critical safeguard for in-house counsel, as it means the fee structures will undergo formal inter-institutional review, providing a degree of stability and transparency before enforcement.

Scope and Calculation Principles

The fees levied under Article 40 are designed to cover the costs arising from the procurement activities carried out pursuant to Chapter IV of Title IV (Articles 37–40). As stated in Article 40(1), these costs shall be jointly financed by the participating entities.

Article 40(4) establishes the principle of proportionality and cost-effectiveness. The fees must be set in advance and must be sufficient to cover the direct and indirect costs incurred by the Commission. The proposal explicitly states that fees should reflect practices of comparable procurement frameworks. This implies that the Commission will likely benchmark its fee structures against existing joint procurement initiatives or central purchasing body models within the EU to ensure market competitiveness. The fees are calculated to be proportionate to the estimated costs of the activities for which they are chargeable, ensuring they do not exceed the verifiable costs incurred by the Commission.

Reimbursement of Initial Establishment Costs

A distinct feature of the CADA fee structure is the treatment of initial setup costs. Article 40(2) acknowledges that the costs incurred in establishing the common procurement activities—including the development of the common procurement platform mentioned in Article 37(6)—may be initially borne by the general budget of the Union.

However, this is not a permanent subsidy. The same paragraph mandates that these initial costs shall be reimbursed by the participating entities over a period not exceeding three years from the date on which the Union budget bore the costs. To facilitate this, the Commission may adopt additional implementing acts laying down the practical and operational arrangements for this reimbursement. Like the fee determination acts, these reimbursement arrangements are also adopted via the examination procedure under Article 46(2).

This two-tiered approach (initial Union funding followed by entity reimbursement) is designed to lower the barrier to entry for Member States, allowing the platform to launch without immediate heavy financial burden on national authorities, while ensuring long-term financial neutrality for the EU budget.

Revenue Allocation and Budgetary Neutrality

Article 40(3) clarifies the budgetary treatment of the collected fees. Revenues generated by these fees constitute internal assigned revenues within the meaning of Article 21(3)(a) of the Financial Regulation (Regulation (EU, Euratom) 2024/2509). These revenues are assigned exclusively to cover the costs of the procurement activities. Any revenue remaining after covering these specific costs shall be entered into the general budget of the Union.

This structure ensures that the joint procurement scheme operates on a break-even basis regarding its operational costs, preventing the cross-subsidisation of other Commission activities while allowing any surplus to support the broader Union budget.

What this means for you

For in-house counsel and compliance officers in public sector bodies or entities participating in the CADA framework, the following obligations and strategic considerations are paramount:

Budgetary Forecasting: You must anticipate that participation in CADA joint procurement will incur direct fees. While the exact amounts are not yet fixed, the requirement for "proportionate" fees based on "estimated costs" suggests a variable model likely tied to the volume or value of procured services. Budget planning should account for a percentage-based fee or a fixed administrative charge per contract.
Reimbursement Liability: Be aware of the potential liability for the reimbursement of initial establishment costs. If your entity joins the framework after the initial launch, you may still be subject to a pro-rata share of the reimbursement obligation over the three-year period defined in Article 40(2). Legal teams should review the specific accession agreements to understand how this historical cost is allocated to new participants.
Payment Conditions: The implementing acts under Article 40(5) will define the "manner and conditions" of payment. This may include pre-payment requirements, invoicing cycles, or penalties for late payment. Compliance officers should establish internal workflows to monitor the publication of these implementing acts to ensure timely financial processing and avoid administrative sanctions.
Transparency and Audit: Since fees are linked to "estimated costs," the Commission will likely be required to provide detailed breakdowns of these costs. Legal teams should prepare for potential audits or requests for justification regarding the fees paid, ensuring that internal records align with the fee structures published in the implementing acts.
Monitoring the Examination Procedure: As the fee rules are adopted via the examination procedure under Article 46(2), there will be a period of consultation before finalisation. Legal counsel should monitor these consultations to advocate for fair cost-allocation models, particularly for smaller entities or those with specific procurement needs that might incur disproportionate administrative overhead.

Common misconceptions

"Fees are a tax on procurement." Incorrect. CADA fees are not a general tax or a levy on the broader economy. They are specific cost-recovery charges assigned only to the participating entities that benefit from the Commission's central purchasing activities. They are strictly limited to covering the direct and indirect costs of those specific procurement operations.
"The EU budget pays for everything." Incorrect. While the general Union budget may initially cover the setup costs of the procurement platform (Article 40(2)), this is temporary. Participating entities are legally obligated to reimburse these costs within three years. Long-term operational costs are fully funded by the fees paid by the participants, ensuring budgetary neutrality for the EU.
"Fees are fixed in the Regulation." Incorrect. The primary text of CADA does not contain specific fee amounts. It only sets the principles (proportionality, cost-coverage). The actual monetary values and payment mechanisms will be defined in subsequent implementing acts, which can be updated to reflect changing operational costs or market conditions.
"All public procurement is subject to these fees." Incorrect. These fees apply only to procurement activities conducted under the specific CADA joint procurement framework (Chapter IV, Title IV). Standard national public procurement procedures that do not involve the Commission acting as a central purchasing body are not subject to these specific CADA fees.

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