Summary As proposed in the Cloud and AI Development Act (CADA), the "Union added value" test requires public procurement officers to include specific non-price award criteria when purchasing innovative cloud computing services and AI systems. This mechanism, detailed in Article 32, evaluates how a tenderer contributes to the European cloud and AI ecosystem. The criteria must be ancillary and not decisive, with the proposal suggesting a maximum weighting of 15 out of 120 points to ensure technical and financial performance remain primary.

Detail

The proposed Cloud and AI Development Act (CADA), COM(2026) 502 final, introduces a targeted instrument to leverage public procurement power for strategic industrial policy. While general public procurement rules allow for quality-based criteria, CADA specifically mandates the inclusion of "Union added value" criteria to address market failures regarding dependence on non-European providers. This mechanism is codified in Article 32.

Scope and Applicability: Innovation is Key

The Union added value test does not apply to every cloud contract. As proposed in Article 32(1), it applies specifically to public procurement procedures for innovative cloud computing services and AI systems. Contracting authorities are obligated to include non-price award criteria as part of the quality evaluation of the tender. These criteria allow the authority to evaluate the tenderer's contribution to the development of a European cloud and AI ecosystem.

This distinction is critical: standard, off-the-shelf cloud hosting contracts that do not involve innovation may not trigger this specific mandatory obligation, though authorities may still voluntarily consider other quality aspects under general procurement law. The focus is on driving market demand toward European providers and technologies in the development of next-generation capabilities.

The Four Dimensions of Assessment

To ensure consistent application across the Union and prevent arbitrary scoring, Article 32(3) outlines four specific dimensions that contracting authorities must use to evaluate the tenderer's contribution. These dimensions focus on supply chain resilience, technological integration, and security of supply:

  1. Supply Chain Strengthening: The extent to which the tenderer contributes to strengthening the digital technology supply chain in the Union. This explicitly includes the use of software or hardware that is designed or manufactured in the Union (Article 32(3)(a)).
  2. Technological Integration: The extent to which the tenderer has integrated technologies developed in the Union. This includes research and development results stemming from Union-funded research and development programmes, as well as the use of tools such as standards, specifications, software, models, or other technology developed in the Union (Article 32(3)(b)).
  3. Innovation and Security of Supply: The extent to which the innovation required to deliver the service contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem (Article 32(3)(c)).
  4. Hardware Origin and Feasibility: The extent to which the service is delivered, to the greatest extent feasible with regard to market availability and technical requirements, through critical computing, storage, and networking hardware components designed and/or manufactured in the Union. If this is not feasible, the criterion considers hardware components from a third country that still contribute to strengthening the security of supply and the development of a European cloud and AI ecosystem (Article 32(3)(d)).

Scoring, Proportionality, and the "Ancillary" Rule

CADA is designed to enhance competitiveness without distorting the single market or violating international trade obligations. Article 32(2) sets strict conditions for these non-price criteria to ensure they remain proportionate:

  • They must be linked to the subject matter of the contract.
  • They must not confer unrestricted freedom of choice on the contracting authority.
  • They must be expressly set out in the procurement documents or contract notice.
  • Crucially, they must be ancillary and not decisive in the award of the contract.

The explanatory memorandum and recitals provide further guidance on proportionality. The criterion relating to European added value should not be decisive for the award of the contract and should be applied in a manner that preserves the primacy of technical and financial criteria directly connected to performance requirements. To guide authorities, the proposal suggests that contracting authorities could consider a maximum weighting of 15 out of 120 points to be allocated to European added value within the overall evaluation methodology. This ensures the criterion remains subordinate to core contract award criteria, preventing a situation where a technically inferior or significantly more expensive bid wins solely due to its "European" content.

Distinction from Sovereignty Assurance Levels

It is vital to distinguish the Union added value test from the Union Assurance Levels (Articles 16–24).

  • Union Assurance Levels are mandatory compliance thresholds. If a risk assessment under Article 29 determines an activity contributes to public order, the authority must procure a service recognised at Level 2, 3, or 4. This is a "pass/fail" eligibility gate.
  • Union Added Value (Article 32) is a scoring mechanism used after eligibility is established. It determines which of the eligible bids offers the best contribution to the EU ecosystem. A provider can score high on added value but still need to meet a specific Assurance Level to be eligible for certain high-risk public sector use cases.

What this means for you

For public-sector procurement officers, the introduction of the Union added value test changes how you structure the evaluation phase of innovative cloud and AI tenders. You must move beyond price and basic technical functionality to assess strategic alignment with EU industrial goals.

1. Drafting Tender Documents

When launching a tender for innovative cloud or AI services, you must explicitly define the non-price criteria related to Union added value in your procurement documents. You cannot apply these criteria ad hoc; they must be clear, measurable, and linked to the subject matter. Your tender notice must specify which of the four dimensions in Article 32(3) you are using and how they will be weighted.

2. Evaluation Methodology

You need to establish a scoring model that respects the "ancillary and not decisive" rule. Using the suggested 15 out of 120 points framework is a safe harbor to demonstrate proportionality. Ensure that your technical and financial criteria still carry the majority weight (e.g., 105 points) to avoid challenges regarding unfair competition or discrimination. If a bid is technically superior but scores lower on Union added value, the technical score must still prevail if the added value criterion is not decisive.

3. Vendor Assessment and Evidence

When evaluating bids, you will need to ask vendors for concrete evidence regarding their supply chain. This includes:

  • Hardware Provenance: Where are the servers, chips, and networking gear designed and manufactured?
  • Software Stacks: Does the solution use EU-developed software, standards, or R&D results?
  • Supply Chain Transparency: Vendors should be prepared to provide Software Bills of Materials (SBOMs) or supply chain transparency reports to substantiate claims about third-country dependencies and mitigation measures.

4. Innovation Focus

Remember that this criterion applies specifically to innovative procurement. For standard, off-the-shelf cloud services that do not involve innovation, this specific mandatory criterion may not apply. However, authorities should verify whether their procurement qualifies as "innovative" under the definition in the Public Procurement Directives to ensure compliance.

Common misconceptions

Misconception 1: This is a mandatory "EU-only" buy rule. The Union added value criterion does not automatically exclude non-EU providers. As stated in Article 32(3)(d), if EU-manufactured hardware is not feasible due to market availability or technical requirements, third-country hardware can still be considered if it contributes to security of supply. The goal is to prefer and incentivize EU value, not to create an absolute ban on foreign technology where no EU alternative exists.

Misconception 2: It applies to all cloud contracts. The provision specifically targets innovative cloud computing services and AI systems (Article 32(1)). Routine, non-innovative cloud hosting contracts may not trigger this specific mandatory criterion, although general procurement principles still apply.

Misconception 3: It overrides technical quality. The criterion is strictly ancillary. It cannot be the decisive factor if a technically superior or significantly cheaper bid exists. The technical and financial criteria directly connected to performance requirements remain primary. The 15/120 point suggestion reinforces that this is a secondary consideration.

Misconception 4: It is the same as the Sovereignty Assurance Levels. The Union added value test (Article 32) is a procurement scoring criterion. It is distinct from the Union Assurance Levels (Articles 16–24), which are mandatory compliance thresholds for services used in critical public order activities. A provider can score high on added value but still need to meet a specific Assurance Level (1, 2, 3, or 4) to be eligible for certain high-risk public sector use cases.

Related

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