Summary As proposed in Article 39(5) of the Cloud and AI Development Act (CADA), contracting authorities and other participating entities may join a Dynamic Purchasing System (DPS) managed by the European Commission after it has already been established. This specific derogation from Article 168 of Regulation (EU, Euratom) 2024/2509 (the EU Financial Regulation) allows for mid-validity access to accelerate procurement. However, this flexibility is strictly capped: the cumulative volume of all new joining requests must not exceed 50% of the initial estimated quantities of the envisaged purchases. The Commission is legally bound to approve valid requests within 10 working days of receipt.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a novel procurement framework designed to address the rapid evolution of cloud and AI markets. A key mechanism within this framework is the use of Dynamic Purchasing Systems (DPS) to facilitate the joint procurement of cloud computing services, AI systems, software, and data centre services. While standard EU public procurement rules generally aim to preserve the integrity of a tender by fixing the participant pool at the outset, CADA introduces a targeted flexibility to ensure that public bodies can access these services without waiting for new multi-year cycles.

The Derogation from Article 168 of the Financial Regulation

Under the standard EU Financial Regulation, specifically Article 168 of Regulation (EU, Euratom) 2024/2509, the rules for joint procurement and the Commission acting as a central purchasing body are designed to ensure stability and predictability. Typically, once a DPS is established, the list of participants is fixed for the duration of the procedure, and new entities cannot join until a new procedure is launched.

Article 39(5) of the CADA proposal explicitly creates a derogation from this standard rule. The text 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."

This provision fundamentally alters the lifecycle of a DPS under CADA. It permits a contracting authority from a Member State, a Union entity, or a partner organisation selected by the Commission to apply for participation at any point during the DPS's validity period. The only procedural constraint is that the request must be made before any future invitation to tender is issued for the specific procurement procedure in question.

The 50% Cumulative Quantity Cap

To prevent this flexibility from undermining the initial competitive balance or distorting the market, the proposal imposes a strict quantitative limit. The derogation is not an open invitation for unlimited late entry. Article 39(5) mandates:

"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 cap is cumulative, not per-entity. It applies to the aggregate volume of all new participants joining the system over its entire lifespan.

  • Calculation: The Commission calculates the total estimated quantity of purchases originally envisaged when the DPS was launched.
  • Limit: The sum of the estimated quantities of all new entities requesting to join must remain below 50% of that original total.
  • Implication: If the initial DPS was estimated to cover €100 million in purchases, the total volume of all new joiners combined cannot exceed €50 million. If one entity joins with an estimated volume of €40 million, only €10 million remains available for all subsequent applicants.

This mechanism ensures that the original tender parameters, which were based on the initial demand, remain the dominant factor in the procurement strategy, while still allowing for significant additional demand to be met.

Approval Timeline and Conditions

Recognizing the urgency of cloud and AI procurement, the proposal sets a tight deadline for the Commission to process these requests. Article 39(5) stipulates:

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

This 10-working-day window is a binding obligation for the Commission, provided the request meets the necessary conditions. Upon approval, the entity is immediately included in any future invitation to tender.

It is crucial to note the scope of this derogation as clarified in Article 39(6):

"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 the derogation is exclusively for "latecomers"β€”entities that sign the common procurement agreement (Article 38) after the DPS is already active. Entities that were part of the initial agreement and the DPS launch do not need this derogation; they are already participants.

Scope of Participating Entities

The right to utilize this derogation is limited to the specific "participating entities" defined in Article 37 of CADA. These include:

  1. Contracting authorities of Member States: Public bodies at national, regional, or local levels.
  2. Union entities: The European Commission, Parliament, Council, and other EU institutions, bodies, offices, and agencies.
  3. Partner organisations: Entities selected by the Commission to participate in the common procurement framework.

These entities act under the Commission's role as a central purchasing body, as detailed in Article 37(3). The derogation allows these diverse actors to leverage the Commission's collective bargaining power and pre-negotiated terms without being locked out by rigid procurement timelines.

Legal Context and Interplay with Article 168

The derogation in Article 39(5) is a deliberate legislative choice to balance the stability required by the Financial Regulation with the agility required by the technology sector. Article 168 of the Financial Regulation generally requires that joint procurement procedures be planned with clear initial parameters to ensure legal certainty and fair competition. By derogating from this, CADA acknowledges that the cloud and AI markets evolve too rapidly for static procurement cycles. A rigid system might result in public bodies purchasing outdated technology by the time a new DPS is launched.

However, this flexibility is not absolute. The derogation does not override fundamental procurement principles such as equal treatment, transparency, or the integrity of the initial tender. The 50% cap serves as the primary safeguard, ensuring that the "dynamic" nature of the system does not dilute the original competitive framework. Furthermore, the Commission must ensure that the inclusion of new entities does not adversely affect the rights and obligations of existing participants or the integrity of procedures already concluded.

What this means for you

For in-house counsel, procurement officers, and compliance teams in public sector bodies or Union entities, Article 39(5) offers a strategic mechanism to accelerate access to sovereign cloud and AI services.

  1. Strategic Timing: You are no longer forced to wait for the start of a new multi-year DPS cycle. If your organisation has an immediate need for specific cloud services or AI systems, you can request access to an existing, active DPS.
  2. Volume Estimation is Critical: Before submitting a request, you must accurately estimate your purchasing volume. Your request contributes to the cumulative 50% cap. Overestimating your needs could lead to rejection if the cap is already near exhaustion. Underestimating might limit your ability to scale later, as you cannot easily increase your allocated volume once approved.
  3. Prepare for Speed: The Commission has a statutory 10-working-day deadline to approve your request. Ensure your application is complete, includes all necessary data on estimated quantities, and confirms your accession to the Article 38 agreement to avoid delays.
  4. Acceptance of Terms: Upon approval, you are bound by the existing terms, conditions, and pricing of the DPS. You cannot renegotiate the baseline contract. You must adhere to the initial contractual provisions and any ancillary support services mandated by the Steering Committee under Article 38(10).
  5. Budgetary Alignment: Since you are joining an existing system, your budget must align with the current pricing and terms of the DPS. You cannot expect the Commission to reset the pricing model for late entrants.

Common misconceptions

  • Misconception: "Any entity can join a DPS at any time."
    • Correction: Only "participating entities" under Article 37 (Member State authorities, Union entities, and selected partners) that accede to the Article 38 agreement after the DPS launch can use this derogation. Private companies or entities not part of the agreement cannot join.
  • Misconception: "The 50% cap applies to each individual request."
    • Correction: The cap is cumulative. It applies to the total volume of all new participants joining the DPS over its lifetime. If the cap is reached, no further requests can be approved, regardless of the size of the individual request.
  • Misconception: "Joining mid-validity allows you to renegotiate terms."
    • Correction: No. The derogation grants access, not a renegotiation right. You must accept the existing contractual framework, pricing, and terms of the DPS.
  • Misconception: "The Commission must approve every request."
    • Correction: Approval is conditional. The Commission must approve the request provided the cumulative requests do not exceed the 50% cap. If the cap is reached, the Commission is legally required to deny further requests.

Related

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