Summary Under the proposed Cloud and AI Development Act (CADA), a "partner organisation" is a specific category of entity that the European Commission may select to participate in common procurement activities for cloud computing services, software, and AI systems. Unlike standard public authorities, these organisations are not necessarily contracting authorities themselves but are designated by the Commission to leverage collective purchasing power. As proposed in Article 37(1), they are treated as "participating entities" alongside Member State contracting authorities and Union entities. This status is enabled by a specific derogation from Article 168 of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation), allowing the Commission to act as a central purchasing body or wholesaler for these selected bodies.

Detail

The proposed Cloud and AI Development Act (CADA) establishes a robust framework for joint public procurement to strengthen Europe's cloud and AI ecosystem. While the primary focus is on public sector bodies, the proposal explicitly extends the benefits of the common procurement framework to a broader set of actors through the mechanism of "partner organisations." This inclusion is critical for ensuring that the EU's strategic procurement leverage can be applied to international bodies, research consortia, or other entities that the Commission deems essential for the ecosystem's development.

Definition and Legal Basis

The definition and scope of partner organisations are anchored in Article 37(1) of the CADA proposal. This article outlines the Commission's power to carry out procurement activities for data centre services, cloud computing services, software, and AI systems. Crucially, it states:

"By way of derogation from Article 168 of Regulation (EU, Euratom) 2024/2509, partner organisations referred to in Article 168(3) of that Regulation selected by the Commission may also participate in the procurement activities set out in this Chapter."

This provision creates a direct legal bridge to the EU's Financial Regulation. Under Article 168(3) of the Financial Regulation, the Commission is empowered to act as a wholesaler, acquiring supplies and services and reselling or donating them to "partner organisations." CADA incorporates this existing legal concept but formalises it within the specific context of cloud and AI sovereignty. The Commission retains the discretion to select which organisations qualify, ensuring that participation is targeted and aligned with the Regulation's strategic objectives.

Status as "Participating Entities"

Once selected by the Commission, these partner organisations are granted a specific legal status within the CADA framework. Article 37(1) explicitly clarifies their standing:

"Contracting authorities of Member States, Union entities, and partner organisations selected by the Commission, shall be considered as 'participating entities' under this Chapter."

This classification is pivotal. By being deemed "participating entities," partner organisations gain access to the full suite of benefits offered by the common procurement framework. These benefits include:

  • Economies of Scale: Access to negotiated framework contracts and dynamic purchasing systems that individual entities might not secure alone.
  • Simplified Administration: Reduced administrative burden through the Commission's central management of the procurement process.
  • Strategic Alignment: Participation in a framework designed to reduce dependencies on third-country providers and foster the EU cloud ecosystem.

The Derogation Mechanism

The inclusion of partner organisations relies on a specific derogation from the standard rules of the Financial Regulation. Normally, the Commission's procurement powers are strictly defined and often limited to its own needs or those of Union entities. Article 37(1) creates an exception, allowing the Commission to extend its central purchasing capabilities to partner organisations selected under Article 168(3) of the Financial Regulation.

This derogation is essential because it legally permits the Commission to act as a central purchasing body for entities that are not traditional public authorities. It enables the Commission to procure services on behalf of these organisations, or to act as a wholesaler by acquiring services and reselling them to the partner organisations. This flexibility is designed to maximise the impact of public procurement in shaping the market for sovereign cloud and AI technologies.

Governance and Operational Framework

Participation in the common procurement framework is not automatic; it is governed by a structured agreement. Article 38 outlines the arrangements for these activities. Before any procurement activity is launched, the Commission and at least two Member States must enter into an agreement laying down the practical arrangements. This agreement serves as a mandate for the Commission to procure on behalf of, or in the name of, the participating entities, including partner organisations.

The governance of these activities is overseen by a Steering Committee, composed of the Commission and representatives of Member States. The Steering Committee is responsible for the strategic oversight of the procurement activities, including setting the strategic direction of the procurement agenda. However, the Commission retains operational responsibility for the management of the procurement activities, including the launch of procedures and the award of contracts.

Partner organisations must accede to this agreement to benefit from the framework. While the Steering Committee sets the strategic direction, the Commission manages the execution. This ensures that the procurement activities remain aligned with the broader objectives of CADA while allowing partner organisations to benefit from the Commission's expertise and market leverage.

Scope of Procurement Activities

The procurement activities available to partner organisations cover a comprehensive range of digital services essential for the cloud and AI ecosystem. Article 37(3) specifies that the Commission may procure:

  • Data centre services
  • Cloud computing services
  • Software
  • AI systems

These services can be procured on behalf of the partner organisations through framework contracts or dynamic purchasing systems. Alternatively, the Commission may act as a wholesaler, acquiring these services and reselling them to the partner organisations. This dual approach ensures flexibility in how partner organisations access the necessary infrastructure and technologies.

What this means for you

For legal counsel, procurement officers, and strategic planners at international organisations, research consortia, or private entities operating in critical infrastructure sectors, understanding the "partner organisation" status is vital for navigating the proposed CADA landscape.

  1. Eligibility and Selection: Your organisation does not automatically qualify. Eligibility depends on being selected by the Commission under Article 168(3) of the Financial Regulation. This typically involves entities that the Commission identifies as crucial for enhancing market efficiency, security, or strategic autonomy. You must monitor Commission calls or designations to determine if your organisation is included.
  2. Strategic Procurement Advantage: If selected, you gain access to a streamlined procurement channel. Instead of navigating fragmented national procurement rules, you can join the Commission-led common framework. This could result in reduced costs, faster deployment of cloud and AI services, and access to sovereign cloud providers that might be difficult to engage individually.
  3. Compliance and Fees: As a "participating entity," you must comply with the terms of the agreement under Article 38. This includes adhering to the strategic direction set by the Steering Committee and respecting the rules of the dynamic purchasing systems. Furthermore, you will be required to contribute to the costs incurred by the Commission through fees, as outlined in Article 40. These fees are designed to cover the operational costs of the procurement activities.
  4. Sovereignty Alignment: Ensure that the services procured through this mechanism align with your organisation's sovereignty requirements. CADA's sovereignty framework (Articles 16–24) mandates specific Union assurance levels for cloud services. Partner organisations should verify that the services available through the common procurement meet their specific assurance level needs, particularly if they handle sensitive data or critical infrastructure.
  5. Governance Participation: While partner organisations are participating entities, they do not have direct voting rights in the Steering Committee. Their influence is exercised through their participation in the procurement activities and feedback mechanisms. You should engage proactively with the Commission to ensure your specific needs are considered in the strategic agenda.

Common misconceptions

  • Misconception: Any private company can apply to be a partner organisation.
    • Reality: Participation is not an open market. Only "partner organisations" specifically selected by the Commission under Article 168(3) of the Financial Regulation can participate. This is a targeted mechanism for bodies designated by the Commission to serve specific strategic purposes.
  • Misconception: Partner organisations have voting rights in the Steering Committee.
    • Reality: The Steering Committee is composed of the Commission and representatives of Member States. While partner organisations are participating entities with access to the procurement framework, they do not have direct representation or voting rights in the strategic oversight body.
  • Misconception: The Commission handles all administrative tasks without cost.
    • Reality: While the Commission acts as the central purchasing body, participating entities, including partner organisations, are required to contribute to the costs incurred. Article 40 establishes a fee mechanism to cover the operational costs of the procurement activities, ensuring the framework is financially sustainable.
  • Misconception: This replaces national procurement laws for all entities.
    • Reality: This mechanism is an alternative or complement to national procurement rules for participating entities. It does not abolish national laws for entities that do not participate in this specific Commission-led framework. It is a voluntary, opt-in mechanism for selected bodies.

Related

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