Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission is empowered to operate dynamic purchasing systems (DPS) to procure cloud computing services, software, and AI systems on behalf of Union entities and Member State contracting authorities. A key innovation in Article 39(5) allows participating entities to request entry into an active DPS after its launch. However, this right is conditional: the Commission must approve the request within 10 working days, provided that the cumulative volume of such late-joining requests does not exceed 50% of the initial estimated quantities of the envisaged purchases. This mechanism, which derogates from the standard Financial Regulation, ensures flexibility for late adopters while protecting the integrity of the procurement process.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, establishes a comprehensive framework to strengthen the EU's cloud and AI ecosystem. A critical component of this framework is the "common procurement framework," designed to leverage the collective purchasing power of the Union to secure resilient, sovereign, and cost-effective digital services. Within this framework, the Commission acts as a central purchasing body, utilizing specific procurement instruments, including dynamic purchasing systems (DPS).

The Legal Architecture of DPS under CADA

A dynamic purchasing system is an electronic procurement procedure that remains open for new economic operators to join throughout its period of validity. Unlike traditional framework agreements, which are typically closed to new entrants once the initial selection is complete, a DPS allows for continuous competition.

Under Article 37, the Commission may carry out procurement activities for data centre services, cloud computing services, software, and AI systems. Article 38 establishes the agreement between the Commission and participating Member States that governs these activities. Article 39 then defines the applicable public procurement framework for entities participating in these activities.

Article 39(1) provides the foundational legal certainty for participating entities:

"A participating entity shall be 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, including through framework contracts concluded by or dynamic purchasing systems operated by the Commission acting as a central purchasing body..."

This provision ensures that when a national contracting authority purchases services through a Commission-operated DPS, it is considered compliant with EU public procurement directives, provided the Commission has followed the rules set out in the CADA proposal.

The Innovation of Article 39(5): Mid-Term Access

The most significant procedural innovation for public sector buyers lies in Article 39(5). Standard EU financial rules, specifically Article 168 of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation), generally imply a fixed list of participants for a given procurement procedure once established. CADA introduces a specific derogation to this rule to accommodate the dynamic nature of the digital market and the varying adoption rates of Member States.

Article 39(5) states:

"By way of derogation from Article 168 of Regulation (EU, Euratom) 2024/2509, participating entities may request from the Commission, throughout the period of validity of a dynamic purchasing system, the possibility to participate in the system. Such request shall be approved by the Commission provided that the cumulative requests do not exceed 50% of the initial estimated quantities of the envisaged purchases. The participation shall be approved within 10 working days of receipt of the request and shall allow the participating entities to be included in any future invitation to tender."

This provision creates a streamlined, time-bound pathway for entities that were not part of the initial agreement or the initial DPS launch to join the system later.

The 50% Cap: A Volume-Based Safeguard

The right to join mid-term is not unlimited. The proposal introduces a strict quantitative cap to prevent the system from becoming unmanageable or disrupting the competitive balance established at the outset.

  1. The Metric: The cap is calculated based on the initial estimated quantities of the envisaged purchases, not the number of participating entities. This means the threshold is defined by the volume of cloud services, software licenses, or AI systems originally forecasted when the DPS was launched.
  2. The Threshold: The Commission may only approve a new request if the cumulative volume of all such mid-term requests remains at or below 50% of those initial estimated quantities.
  3. The Implication: If a DPS was launched with an estimated purchase volume of €100 million, the Commission can only approve new participants whose combined estimated demand does not exceed €50 million. Once this threshold is reached, no further mid-term requests can be approved for that specific DPS cycle, preserving the original scope and competitive dynamics.

The 10-Working-Day Approval Deadline

To ensure administrative efficiency and prevent bottlenecks for public sector buyers, Article 39(5) imposes a strict deadline on the Commission.

"The participation shall be approved within 10 working days of receipt of the request..."

This deadline applies provided the 50% cap has not been breached. It creates a predictable timeline for contracting authorities, allowing them to plan their procurement strategies with certainty. If the Commission fails to approve or reject within this window, the legal text implies a procedural breach, though the specific remedy would depend on general principles of EU administrative law.

Scope and Eligibility: Who Can Use This Mechanism?

It is crucial to distinguish which entities can utilize this mid-term entry mechanism. Article 39(6) explicitly limits the scope:

"The possibility referred to in paragraph 5 shall be available only to participating entities that accede to the agreement referred to in Article 38 after the dynamic purchasing system has been launched."

This means:

  • Latecomers Only: Entities that were already part of the Article 38 agreement when the DPS was launched must have participated in the initial selection process. They cannot use the Article 39(5) mechanism to "re-enter" or bypass the initial selection.
  • Agreement Requirement: The entity must first accede to the common procurement agreement (Article 38) before they can request entry into a specific DPS.
  • Future Tenders Only: Approval under Article 39(5) grants the entity the right to be included in any future invitation to tender. It does not grant retroactive rights to bids that have already been issued or awarded.

What this means for you

For legal counsel, procurement officers, and compliance teams within EU Member States and Union entities, the CADA proposal introduces a new, flexible procurement channel with specific operational constraints.

1. Strategic Timing for Accession

If your public body anticipates needing sovereign cloud services but missed the initial launch of a CADA DPS, you do not need to wait for a new tender cycle. You can accede to the Article 38 agreement and immediately request entry into an active DPS. However, you must act quickly. Since the 50% cap is cumulative, early accessors have a higher probability of securing a spot before the volume threshold is reached.

2. Internal Readiness for the 10-Day Window

The 10-working-day approval deadline is tight. Once you submit your request to the Commission, your internal teams must be prepared to onboard immediately upon approval. You cannot afford to delay the internal administrative steps required to accept an invitation to tender, as the next tender might be issued shortly after your approval.

3. Volume Estimation and Cap Monitoring

When preparing your request, you must provide a realistic estimate of your intended procurement volume. Since the cap is based on "initial estimated quantities," your request contributes to the cumulative total. If your organization is large, your request might consume a significant portion of the remaining 50% allowance. It is advisable to coordinate with the Commission to understand the remaining capacity before submitting a formal request.

4. Compliance with Sovereignty Levels

Joining a DPS does not exempt you from the CADA sovereignty framework. Before participating in a tender, you must ensure that the services you intend to procure align with the Union assurance levels required by your specific risk assessment under Article 29. The DPS will offer services at various assurance levels (1 through 4), and your organization remains responsible for selecting the appropriate level based on the public order relevance of your activities.

5. No Retroactive Claims

Be clear in your internal communications that joining a DPS mid-term does not allow your organization to claim rights to contracts already awarded. Your participation is strictly prospective. Any attempt to challenge past awards based on a new entry into the DPS would likely be legally unfounded under Article 39(5).

Common misconceptions

Misconception 1: The 50% cap limits the number of organizations. Reality: The cap in Article 39(5) is strictly volume-based. It refers to "50% of the initial estimated quantities of the envisaged purchases." A single large entity could theoretically consume the entire remaining cap, or many small entities could join, as long as the total estimated volume does not exceed the threshold.

Misconception 2: Any public body can join a DPS at any time. Reality: Eligibility is restricted to "participating entities" that have acceded to the Article 38 agreement after the DPS launch. Entities already in the agreement at the time of launch must have participated in the initial selection. Furthermore, the 50% cap acts as a hard stop.

Misconception 3: The Commission can add entities without a request. Reality: The mechanism is request-driven. Article 39(5) states that "participating entities may request... the possibility to participate." The Commission cannot unilaterally add entities; the initiative must come from the contracting authority.

Misconception 4: Joining a DPS waives all national procurement rules. Reality: While Article 39(1) deems the entity to have fulfilled obligations under Union public procurement law, national laws that are not pre-empted by EU law or that impose additional procedural requirements (e.g., specific national reporting or transparency rules) may still apply. Additionally, the entity must still comply with the specific rules of the DPS and the CADA sovereignty framework.

Related

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