Summary The proposed Cloud and AI Development Act (CADA) establishes a specific flexibility mechanism for Dynamic Purchasing Systems (DPS) managed by the European Commission. Under Article 39(5), participating entities that accede to the common procurement agreement after a DPS has been launched may request to join that system during its validity. However, this is strictly capped: the "cumulative requests do not exceed 50% of the initial estimated quantities of the envisaged purchases." The Commission must approve or reject such requests within 10 working days of receipt. If approved, the entity is included in future invitations to tender. Crucially, Article 39(6) limits this derogation exclusively to entities acceding to the Article 38 agreement after the DPS launch; existing members cannot use this shortcut.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, creates a centralized procurement framework to leverage the collective purchasing power of Union entities, Member State contracting authorities, and selected partner organisations. A cornerstone of this framework is the Commission's ability to act as a central purchasing body, establishing Dynamic Purchasing Systems (DPS) for cloud computing services, software, and AI systems. While standard public procurement rules generally fix the scope of a tender at its launch, CADA introduces a targeted derogation to allow for the controlled expansion of these systems, balancing flexibility with market integrity.

The Derogation: Article 39(5)

Article 39(5) of the proposal provides a specific exception to the standard rules of the Financial Regulation (Regulation (EU, Euratom) 2024/2509). It permits participating entities to request participation in a DPS at any point during its period of validity, provided the request is made before any future invitation to tender is issued. This mechanism is designed to prevent the need for restarting complex tender processes every time a new public body wishes to join the framework, thereby accelerating the uptake of sovereign and innovative solutions.

However, this flexibility is not unlimited. To protect the integrity of the original market assessment and prevent excessive dilution of the initial procurement volume, the proposal imposes a quantitative ceiling. Article 39(5) explicitly states:

"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."

This "50% cap" refers to the aggregate volume of new participation requests relative to the total quantity originally estimated for the DPS. It is a volume-based constraint, not a value-based one. Once the cumulative volume of requests from new entrants reaches 50% of the initial forecast, no further requests under this specific derogation can be approved, effectively closing the "back door" for new participants until the next procurement cycle.

The Approval Timeline

The proposal mandates a rapid decision-making process to ensure that new participants can compete for upcoming contracts without undue delay. Article 39(5) requires that:

"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 10-working-day deadline is binding on the Commission. If the request meets the criteria (i.e., the entity has acceded to the Article 38 agreement, the DPS is active, and the 50% cap has not been breached), the Commission must grant approval within this timeframe. Upon approval, the entity is immediately eligible to receive and respond to future invitations to tender issued under that DPS, placing them on equal footing with original participants for subsequent contracts.

The Eligibility Restriction: Article 39(6)

A critical nuance in the proposal is the strict eligibility criteria defined in Article 39(6). This paragraph clarifies that the possibility to request participation under the 50% cap is not available to all entities indiscriminately. It states:

"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 creates a distinct "founding" vs. "late-joining" distinction:

  1. Founding Members: Entities that are already party to the Article 38 agreement at the moment the DPS is launched must follow the standard qualification procedures applicable to that specific DPS (e.g., the initial selection process). They cannot invoke Article 39(5) to bypass these steps.
  2. Late Joiners: Only entities that sign the Article 38 agreement after the DPS has been established can utilize the Article 39(5) derogation. This ensures that the derogation serves its purpose of expanding the framework to new entrants rather than allowing existing members to re-enter or bypass initial vetting.

Context: The Article 38 Agreement

The mechanism described above operates within the broader governance structure of Article 38. This article establishes the "agreement" between the Commission and at least two Member States that sets the practical arrangements for the procurement activities. This agreement acts as a mandate for the Commission to procure on behalf of participating entities. The 50% cap and 10-day rule are procedural safeguards embedded within this framework to ensure that the expansion of the DPS remains manageable and that the Commission's operational capacity is not overwhelmed by a sudden influx of new participants.

What this means for you

For legal counsel, procurement officers, and compliance teams within EU public sector bodies, understanding the mechanics of Article 39 is vital for strategic planning and risk management.

1. Strategic Timing of Accession

The timing of your organization's accession to the Article 38 agreement is a strategic decision. If your entity intends to join a specific DPS that is already active, you must ensure you accede to the Article 38 agreement after the DPS launch to qualify for the Article 39(5) derogation. If you accede before the launch, you will be subject to the standard initial qualification process, which may be more rigorous or have different timelines. Conversely, if you are a founding member, you cannot use the 10-day fast-track to join a different DPS launched later; you must follow that DPS's specific entry rules.

2. Monitoring the 50% Threshold

The 50% cap is a shared resource. As a participating entity, you should actively monitor the status of active DPSs managed by the Commission. If a DPS is nearing its 50% threshold for new participation requests, the window for your organization to join via this derogation may close unexpectedly. Early engagement with the Commission's procurement unit is essential to gauge the remaining capacity for new entrants. Once the cumulative requests reach the limit, no further approvals can be granted under this article, regardless of how urgent your need for the service might be.

3. Preparing for the 10-Day Window

The 10-working-day approval timeline is tight. To ensure your request is processed within this window, your organization must submit a complete and compliant application. Any deficiency in documentationβ€”such as proof of accession to the Article 38 agreement or failure to meet the DPS's qualification criteriaβ€”could delay the decision, potentially causing you to miss the next invitation to tender. The Commission is not obligated to extend this deadline for administrative errors on the part of the applicant.

4. Budgetary Implications

Participation in the common procurement framework is not free. Article 40 establishes that participating entities must contribute to the costs incurred by the Commission through fees. These fees are levied to cover the direct and indirect costs of the procurement activities. When planning to join a DPS under Article 39(5), ensure your budget accounts for these fees, which are calculated to be proportionate to the estimated costs of the activities. The fees are intended to cover the operational costs of the system, including the administrative burden of processing new accession requests.

5. Compliance Beyond Procurement

Joining a DPS via Article 39(5) simplifies the procurement process but does not exempt your organization from other CADA obligations. You must still ensure that the cloud services you procure comply with the relevant Union assurance levels (as determined by risk assessments under Article 29) and adhere to open-source preferences (Article 41). The DPS framework facilitates the purchase of compliant services, but the ultimate responsibility for ensuring the services meet sovereignty and security requirements remains with the contracting authority.

Common misconceptions

Misconception 1: The 50% cap applies to the total monetary value of contracts. The cap in Article 39(5) is explicitly defined as "50% of the initial estimated quantities of the envisaged purchases." It is a volume-based limit (e.g., number of seats, terabytes of storage, or specific service units), not a financial value limit. A new entrant requesting a small volume of services counts towards this cap just as a large entrant does, relative to the initial forecast.

Misconception 2: Any public body can join an active DPS at any time. This is incorrect. Article 39(6) strictly limits the derogation to entities that accede to the Article 38 agreement after the DPS has been launched. Entities that were already part of the Article 38 agreement when the DPS was launched cannot use this mechanism to join a DPS they missed at the start. They must follow the standard qualification procedures applicable to that DPS.

Misconception 3: The Commission has discretion to reject requests even if under the cap. While the Commission retains operational management responsibilities, Article 39(5) uses mandatory language: "The participation shall be approved... provided that the cumulative requests do not exceed 50%." If the entity is eligible (acceded after launch) and the cap is not breached, the Commission is legally bound to approve the request within 10 working days. Rejection is only permissible if the entity fails to meet other eligibility criteria or if the cap is exceeded.

Misconception 4: This rule applies to all CADA procurement. The 50% cap and 10-day approval rule apply exclusively to Dynamic Purchasing Systems operated by the Commission under the common procurement framework (Title IV, Chapter IV). It does not apply to framework contracts, direct awards, or procurement procedures conducted by individual Member States outside this specific Commission-led mechanism.

Related

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