Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission is empowered to act as a central purchasing body to aggregate public demand for digital infrastructure. As set out in Article 37, the Commission may procure data centre services, cloud computing services, software, and AI systems on behalf of itself, Union entities, and Member State contracting authorities. This mechanism allows public buyers to pool their demand, leverage collective bargaining power, and access favourable terms for digital solutions that individual authorities might struggle to procure independently. The framework is designed to be voluntary, financially self-sustaining through fees, and fully compliant with existing public procurement rules.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, introduces a transformative mechanism to address the fragmentation of the EU digital market. A core pillar of this framework is the establishment of a structured, Union-level procurement channel. This is designed to counter the market power of dominant non-EU providers and to assist public authorities that lack the technical expertise or purchasing volume to negotiate effectively on their own.

The Scope of Commission Procurement Article 37(1) explicitly defines the scope of the Commission's new procurement powers. As proposed, the Commission may carry out procurement activities to procure:

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

These activities are not limited to the Commission's own needs. The provision empowers the Commission to act for "Union entities" (EU institutions, bodies, offices, and agencies) and, crucially, for "contracting authorities of Member States." This scope is subject to the exceptions and derogations set out in Title IV of the Regulation, which modifies the standard application of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation) to facilitate this specific framework.

Acting as a Central Purchasing Body The most significant innovation in Article 37(3) is the explicit empowerment of the Commission to act as a central purchasing body. This role expands beyond the traditional joint procurement mechanisms found in the Financial Regulation. Under the proposed CADA, the Commission may act as a central purchasing body for Member State contracting authorities and partner organisations selected by the Commission.

This role operates through two primary modes:

  1. Procuring on behalf of entities: The Commission may conclude framework contracts or operate dynamic purchasing systems for services intended for participating entities. In this mode, the Commission negotiates the terms, selects the providers, and establishes the contracts. Participating public authorities can then "call off" these contracts to meet their specific needs without running a full tender process themselves.
  2. Acting as a wholesaler: The Commission may acquire services and supplies and resell them to Member State contracting authorities. In exceptional circumstances, it may even donate these supplies. This "wholesaler" model allows the Commission to buy in bulk, securing economies of scale, and then distribute the services to smaller authorities that might not otherwise qualify for or afford large-scale contracts.

Who Can Participate? The entities eligible to benefit from this scheme are defined as "participating entities" under Article 37(1). This definition is broad and inclusive, covering:

  • Contracting authorities of Member States (including regional and local authorities)
  • Union entities
  • Partner organisations selected by the Commission

This broad definition ensures that the framework is not restricted to national governments. Smaller municipalities, specialized agencies, and other public bodies can access these pooled procurement opportunities, provided they join the framework established by the Commission.

Ancillary Support Services Recognizing that procurement of complex digital technologies is resource-intensive, Article 37(4) allows the Commission to provide ancillary support to participating entities. This support is designed to lower the barrier to entry for authorities with limited internal capacity. The support may include:

  • Technical infrastructure enabling participating entities to use awarded contracts.
  • Advice and support on preparing and implementing procurement procedures.
  • Preparation and conduct of procurement procedures on behalf of the entities.
  • Invoicing and other administrative services relating to the contracts awarded.

This support can be provided directly by the Commission, through a subcontractor, or by delegation to Union bodies. Notably, Article 37(5) states that accession to the procurement agreement may be subject to the acceptance of one or more of these ancillary support services, ensuring that participants have the necessary tools to implement the contracts effectively.

Governance and Fees The framework is governed by a specific agreement between the Commission and at least two Member States, as outlined in Article 38. This agreement establishes a Steering Committee composed of the Commission and one representative from each participating Member State at the national level. The Steering Committee is responsible for strategic oversight, including proposing the strategic direction of the procurement agenda and approving the strategic direction of each procurement procedure before it is launched.

To ensure financial sustainability, Article 40 stipulates that the costs arising from these procurement activities are jointly financed by the participating entities through fees levied by the Commission. These fees are set to cover the direct and indirect costs incurred by the Commission, ensuring that the scheme does not burden the general EU budget beyond initial setup costs. Initial establishment costs may be borne by the general budget of the Union but must be reimbursed by participating entities over a period not exceeding three years.

What this means for you

For public-sector procurement officers, IT directors, and policy makers, CADA's central procurement role offers a strategic lever to overcome common barriers in acquiring cloud and AI technologies.

1. Access to Better Terms and Pricing Individual public authorities, especially smaller municipalities or specialized agencies, often face a significant power imbalance when negotiating with hyperscalers or large software vendors. By joining the Commission's central procurement framework, you can leverage the aggregated demand of the entire EU public sector. This collective buying power is likely to result in more competitive pricing, better service level agreements (SLAs), and more favourable contractual terms than you could secure independently.

2. Reduced Administrative Burden Procuring complex AI systems and cloud infrastructure requires significant technical expertise, legal resources, and time. CADA allows the Commission to handle the heavy lifting of tender preparation, market consultation, and contract negotiation. As a participating entity, you can focus on defining your specific needs and implementing the solution, rather than managing the entire procurement lifecycle from scratch. The ancillary support services mentioned in Article 37(4) further assist with invoicing and administrative tasks, streamlining the process.

3. Standardization and Interoperability Using a common procurement framework encourages standardization across borders. This can lead to more interoperable systems within your organization and with other EU public bodies. It also simplifies compliance, as the contracts awarded by the Commission will already meet the stringent sovereignty and security requirements outlined in the rest of CADA, such as the Union assurance levels for cloud services. This reduces the risk of procurement errors and ensures alignment with EU strategic goals.

4. Strategic Alignment with EU Goals Participating in this framework aligns your organization with the EU's broader strategic objectives of technological sovereignty and reduced dependency on non-European providers. By using the Commission's procurement mechanisms, you are actively contributing to the development of a resilient European cloud and AI ecosystem. This is particularly relevant for authorities seeking to meet the public-order protection requirements of Article 29 and Article 30.

Common misconceptions

Misconception 1: The Commission will force all public authorities to use its procurement services. Reality: Participation is entirely voluntary. Article 37 empowers the Commission to carry out procurement activities and act as a central purchasing body, but it does not mandate that all Member States or authorities must use this service. Public authorities retain the right to conduct their own procurements, provided they comply with relevant EU and national procurement laws. However, those who do not participate may miss out on the economies of scale and standardized contracts offered by the central framework.

Misconception 2: This replaces national procurement laws. Reality: CADA complements existing procurement frameworks rather than replacing them. Article 39 clarifies that a participating entity is deemed to have fulfilled its obligations under applicable Union public procurement law where it acquires supplies or services through contracts awarded by the Commission. This means that by using the Commission's central purchasing body role, you are complying with procurement rules, but it does not abolish national laws for procurements conducted outside this framework.

Misconception 3: The Commission will bear the full cost of the procurement process. Reality: The scheme is designed to be financially self-sustaining through fees. Article 40 states that costs are jointly financed by participating entities. The Commission will levy fees to cover the direct and indirect costs of the procurement activities. While initial establishment costs may be borne by the EU budget, they will be reimbursed by participating entities over a set period. This ensures that the service is paid for by those who benefit from it, rather than by the general EU taxpayer.

Misconception 4: Only large Member States can benefit. Reality: The framework is designed to be inclusive. The definition of "participating entities" includes contracting authorities of Member States, which can encompass regional and local authorities. The ancillary support services provided by the Commission are specifically intended to help smaller entities that may lack the internal capacity to manage complex digital procurements. The "wholesaler" model in Article 37(3) is particularly beneficial for these smaller players.

Related

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