Summary In the proposed Cloud and AI Development Act (CADA), a "using entity" is a Union institution, body, office, agency, or public sector body that is a member of the EuroCloud Federation and receives data centre or cloud computing services from another member (the "sharing entity"). As proposed in Article 35, using entities access these services to boost capacity and resilience, paying only strictly cost-recovery fees rather than market prices. This mechanism allows public bodies to share idle resources without triggering standard public procurement rules.

Detail

The EuroCloud Federation is a new mechanism introduced by the Cloud and AI Development Act (CADA) to allow public sector bodies across the EU to share idle or surplus cloud and data centre capacity. To understand the role of a using entity, it is necessary to look at the specific legal definitions and obligations set out in Title IV of the proposed regulation, particularly Article 35.

Definition and Role

According to Article 35(1) of CADA, a "using entity" is defined functionally as a member of the EuroCloud Federation to whom a "sharing entity" makes data centre services or cloud computing services available.

  • Who can be a using entity? Under Article 34(1), the EuroCloud Federation is open to Union entities (institutions, bodies, offices, and agencies) and public sector bodies on a voluntary basis. Therefore, a using entity is typically a national ministry, a local government authority, a regional agency, or an EU institution that has joined the federation to access computing resources it does not own or operate directly.
  • The Counterpart: The using entity always acts in relation to a "sharing entity." The sharing entity is the member that owns the hardware and provides the service. The using entity is the recipient of that service.

How Access Works

The relationship is governed by strict conditions to ensure it remains a public-sector cooperation rather than a commercial market transaction.

  1. Demonstration of Conditions: Before a sharing entity can provide services to a using entity, the sharing entity must demonstrate to the Commission that it fulfils specific technical, operational, and organisational conditions (Article 35(3)). The Commission then assesses this information and allows the sharing to proceed if conditions are met (Article 35(4)).
  2. Cost-Based Fees: A critical aspect for using entities is the financial model. Article 35(5) states that a sharing entity may charge a fee to the using entity. However, this fee is strictly limited. It must be limited to the costs incurred by the sharing entity in relation to sharing the service.
  3. No Pecuniary Interest: The fee charged to the using entity must not constitute a "pecuniary interest" within the meaning of Directive 2014/24/EU (the Public Procurement Directive) or Regulation (EU, Euratom) 2024/2509 (the Financial Regulation). This means the transaction is not considered a public contract. The using entity is not "buying" a service in the commercial sense; it is participating in a cooperative exchange of resources.

Contrast with the Sharing Entity

To fully grasp the using entity role, it helps to contrast it with the sharing entity:

  • Sharing Entity: Owns the hardware (directly or through an intermediate legal entity it controls), provides the service, and incurs the costs. It charges fees only to recover costs.
  • Using Entity: Does not own the hardware being used in this specific transaction. It receives the service, benefits from increased capacity without building new infrastructure, and pays only the recoverable costs.

Legal Basis and Purpose

The purpose of this arrangement, outlined in Article 34(2), is to facilitate the sharing of public sector data centre services and cloud computing services between Union entities and public sector bodies. For the using entity, this offers a way to access sovereign, trusted cloud capacity that might otherwise be unavailable or too expensive to develop independently. It supports the broader CADA goal of reducing dependency on third-country providers and increasing the resilience of public sector IT infrastructure.

What this means for you

If you are a public-sector procurement officer or IT manager, understanding the "using entity" status is crucial for future cloud strategies.

  • Access to Sovereign Capacity: As a using entity, your organisation can access cloud services from other public bodies that have surplus capacity. This can be a faster route to deploying sovereign cloud solutions than building new data centres or going through lengthy commercial procurement processes.
  • Cost Efficiency: You are not subject to commercial market rates. Under Article 35(5), you only pay for the actual costs incurred by the sharing entity (e.g., allocation of resources, integration, compliance management). This can significantly lower the total cost of ownership for your IT systems.
  • No Public Procurement Procedure: Because the fee does not constitute a pecuniary interest, sharing services within the EuroCloud Federation does not fall under standard Union public procurement rules (Recital 73). This simplifies the administrative burden for using entities, as you do not need to run a tender for the capacity itself, provided the sharing entity has been approved by the Commission.
  • Voluntary Participation: Joining the EuroCloud Federation is voluntary (Article 34(1)). Your organisation would need to formally request to join. Once a member, you can choose to act as a using entity when you need capacity, or potentially as a sharing entity if you have idle resources.

Common misconceptions

"A using entity buys cloud services commercially." No. The relationship is based on public-sector cooperation. The using entity pays a cost-recovery fee, not a market price. The transaction is explicitly designed not to be a commercial contract under procurement law.

"Any private cloud provider can be a using entity." No. Participation in the EuroCloud Federation is limited to public entities (Union entities and public sector bodies). Private parties cannot directly participate as using entities or sharing entities (Recital 71).

"Using entities have no control over the service quality." While the sharing entity provides the service, they must meet strict technical, operational, and organisational measures for security and resilience (Article 35(2)). These conditions are assessed by the Commission before the sharing can begin, ensuring that using entities receive reliable and secure services.

"The fee can include a profit margin." No. Article 35(5) strictly limits the fee to the costs incurred. It explicitly states that the fee shall not constitute a pecuniary interest, which excludes profit-making.

Related

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