Summary Under the proposed Cloud and AI Development Act (CADA), a dynamic purchasing system (DPS) is a permanent electronic procurement mechanism that the European Commission may operate as a central purchasing body to acquire cloud computing services, data centre services, software, and AI systems on behalf of Member States' contracting authorities and Union entities. As proposed in Article 37(3)(a), the Commission can conclude framework contracts or operate DPSs to aggregate demand and reduce dependencies. Crucially, Article 39(5) introduces a specific derogation allowing late entrants to join an existing DPS throughout its validity, provided cumulative requests do not exceed 50% of the initial estimated quantities. The Commission must approve such requests within 10 working days, ensuring the new participant is included in any future invitation to tender.

Detail

The Cloud and AI Development Act (CADA), proposed as Regulation COM(2026) 502 final, establishes a novel framework for the common procurement of digital technologies to strengthen the EU's cloud and AI ecosystem. A cornerstone of this framework is the empowerment of the European Commission to act as a central purchasing body for Member States' contracting authorities, Union entities, and selected partner organisations. This mechanism relies heavily on dynamic purchasing systems (DPS) and framework contracts to aggregate demand, achieve economies of scale, and foster the uptake of sovereign-compliant solutions.

The Commission's Mandate as Central Purchasing Body

Article 37 of the CADA proposal defines the scope of the Commission's procurement activities. Specifically, Article 37(3)(a) empowers the Commission to procure data centre services, cloud computing services, software, and AI systems on behalf of, or in the name of, one or more contracting authorities of Member States and partner organisations. This is achieved by concluding framework contracts or operating dynamic purchasing systems for services intended for the participating entities.

Participating entities, as defined in Article 37(1), include contracting authorities of Member States, Union entities, and partner organisations selected by the Commission. By joining this system, these entities leverage the Commission's purchasing power to negotiate better terms and access innovative, sovereign-compliant solutions that might be difficult to procure individually. The Commission may also act as a wholesaler, acquiring services and reselling them to participating entities.

Operational Mechanics of Dynamic Purchasing Systems

In the context of CADA, a dynamic purchasing system operates as an open, electronic system for the procurement of works, supplies, or services that are available on the market. It functions on a permanent basis, allowing new competitors to join at any time during its period of validity, subject to the conditions of the call-off contracts.

Under Article 37(6), the Commission is empowered to establish and manage a common procurement platform to facilitate these activities. This platform ensures technical interoperability and provides the necessary infrastructure for participating entities to use awarded contracts or award specific contracts under concluded framework agreements. The Commission retains responsibility for the operation and management of procurement activities, including the launch of procedures and the award of contracts, while the Steering Committee provides strategic oversight.

The "Late Entrant" Derogation: Article 39(5)

A significant innovation in the CADA proposal regarding dynamic purchasing systems is the explicit provision for late entrants, detailed in Article 39(5). This article introduces a derogation from Article 168 of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation), which typically governs such procedures.

Article 39(5) states that participating entities may request from the Commission, throughout the period of validity of a dynamic purchasing system, the possibility to participate in the system. This request must be approved by the Commission, provided that the cumulative requests do not exceed 50% of the initial estimated quantities of the envisaged purchases. This cap is a critical safeguard; it ensures that the integrity of the original procurement procedure is not undermined by a sudden influx of new participants that could distort competition or require a re-evaluation of the initial market consultation and volume estimates.

The procedural timeline for late entrants is strict and designed for efficiency. The Commission must approve the participation within 10 working days of receipt of the request. Upon approval, the participating entity is included in any future invitation to tender issued under the dynamic purchasing system. This mechanism allows public authorities to access pre-negotiated, sovereign-compliant cloud and AI solutions without undergoing a new, lengthy procurement procedure, provided the overall volume of new participation remains within the defined threshold.

It is important to note that this possibility is available only to participating entities that accede to the agreement referred to in Article 38 after the dynamic purchasing system has been launched.

Applicable Procurement Rules and Legal Effects

Article 39(1) clarifies the legal effect of participating in these systems. A participating entity is deemed to have fulfilled its obligations under applicable Union public procurement law where it acquires supplies or services by means of contracts awarded by the Commission under this Chapter. This includes framework contracts concluded by or dynamic purchasing systems operated by the Commission acting as a central purchasing body.

This provision is critical for in-house counsel, as it provides legal certainty that using the Commission's DPS satisfies national and EU procurement obligations, provided the entity adheres to the rules of the system. However, Article 39(3) notes that a contracting authority acting as a central purchasing body must ensure compliance with any contractual requirements by which it is itself bound in its agreements with the contracting authorities it serves.

Furthermore, Article 39(2) specifies that the procedural provisions applicable to Union institutions shall apply to the procedures for the award of specific contracts under framework contracts or dynamic purchasing systems.

Fees and Financing

The costs of operating these dynamic purchasing systems and the associated common procurement platform are covered by fees levied on participating entities, as outlined in Article 40. These fees are set in advance, are proportionate to the estimated costs, and are sufficient to cover the direct and indirect costs incurred by the Commission. Initial establishment costs may be borne by the general budget of the Union and reimbursed by participating entities over a period not exceeding three years. Revenues generated by these fees constitute internal assigned revenues within the meaning of Article 21(3)(a) of Regulation (EU, Euratom) 2024/2509.

What this means for you

For in-house counsel, procurement officers, and compliance teams in public sector bodies, the CADA proposal's provisions on dynamic purchasing systems present both strategic opportunities and specific operational obligations.

1. Simplified Compliance and Legal Certainty By participating in a Commission-operated DPS, your organisation can significantly reduce procurement complexity. Article 39(1) ensures that your use of the system is deemed compliant with Union public procurement law. This reduces the risk of legal challenges and the administrative burden of running full tender procedures for standard cloud or AI services, provided you follow the system's rules.

2. Strategic Entry Timing and the 50% Cap If your organisation missed the initial launch of a relevant DPS, you are not necessarily locked out. Under Article 39(5), you can apply to join later. However, you must monitor the 50% cap on cumulative requests. If the system is nearing this threshold, your entry may be blocked to protect the integrity of the original procurement. Therefore, early engagement with the Commission's procurement agenda and monitoring of the system's uptake is advisable.

3. Rapid Integration via the 10-Day Rule The 10-working-day approval window for late entrants (Article 39(5)) allows for relatively quick integration into future tenders. Compliance teams should prepare their organisational profiles, sovereignty documentation (e.g., Union assurance levels), and financial guarantees in advance to submit complete applications promptly. Delays in documentation could jeopardise the ability to meet the 10-day deadline.

4. Sovereignty Requirements Remain Paramount Remember that the services procured through these systems must meet the CADA sovereignty framework. Contracting authorities whose activities contribute to the preservation of public order must procure services with Union assurance levels 2, 3, or 4 (Article 30(3)). Ensure that the DPS you join offers services meeting your specific assurance level requirements, as the Commission's procurement activities are subject to the same sovereignty criteria.

5. Fee Budgeting and Cost Recovery Participating entities must budget for the fees associated with these procurement activities (Article 40). These fees are internal assigned revenues for the Commission and are designed to cover the operational costs of the procurement framework. The fees are calculated pro-rata per transaction or via a flat fee per subsequent awarded contract, ensuring cost recovery without generating surplus.

Common misconceptions

Misconception 1: Late entrants can join a DPS unconditionally. Reality: Article 39(5) imposes a strict cap: cumulative requests from late entrants must not exceed 50% of the initial estimated quantities. If this threshold is reached, further requests may be denied to protect the integrity of the original procurement process and the initial market consultation.

Misconception 2: Joining a DPS automatically includes you in all ongoing tenders. Reality: Article 39(5) specifies that approved late entrants are included in any future invitation to tender. They do not retroactively qualify for tenders already in progress or concluded before their approval. The 10-day approval ensures inclusion in future invitations, not past ones.

Misconception 3: The Commission runs DPSs for any type of good. Reality: Article 37(3)(a) limits the Commission's central purchasing activities specifically to data centre services, cloud computing services, software, and AI systems. It does not cover general goods, construction works, or services outside this digital scope.

Misconception 4: Participation is free. Reality: Article 40 establishes that participating entities must pay fees to cover the costs of the procurement activities. These fees are calculated based on the estimated costs and are charged to the entities benefiting from the Commission's central purchasing role. They are not borne by the general EU budget beyond initial setup costs.

Related

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