Summary Under the proposed Cloud and AI Development Act (CADA), the joint procurement agreement is a foundational instrument that enables the European Commission to act as a central purchasing body for EU public authorities. As proposed, this agreementβ€”concluded between the Commission and at least two Member Statesβ€”is explicitly deemed to satisfy the requirements for a joint procurement agreement and mandate under Article 168(2) and (3) of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation) (Article 38(1)). This legal mechanism streamlines the procurement process, removing the need for ad-hoc mandates for every procedure. The agreement constitutes a standing mandate for the Commission to procure on behalf of, or in the name of, participating entities, including Union institutions, Member State contracting authorities, and selected partner organisations (Article 38(2)).

Detail

The proposed CADA introduces a sophisticated framework for joint procurement designed to leverage the collective purchasing power of the EU public sector. This mechanism aims to reduce dependencies on third-country providers, secure better commercial terms, and accelerate the adoption of sovereign cloud and AI solutions. The legal engine driving this framework is the procurement agreement detailed in Article 38.

The Legal Fiction: Deeming Compliance with the Financial Regulation

The most significant legal innovation in Article 38(1) is the establishment of a "legal fiction" regarding the Financial Regulation. Before any procurement activity can be carried out under Article 37, the Commission and at least two Member States must enter into a specific agreement.

Crucially, Article 38(1) states that this agreement "shall be deemed to satisfy the requirements of the joint procurement agreement and mandate referred to in Article 168(2) and (3) of Regulation (EU, Euratom) 2024/2509."

In standard EU public procurement, joint procurement often requires a specific mandate for each procedure or a complex series of agreements to establish the legal basis for one entity to act for another. By deeming the CADA agreement to satisfy these requirements automatically, the proposal creates a stable, long-term legal foundation. This allows the Commission to act as a wholesaler or central purchasing body without needing to re-negotiate the legal basis for every new cloud or AI tender, significantly reducing administrative friction and accelerating market intervention.

The Mandate: Scope and Participating Entities

Article 38(2) clarifies the operational scope of this agreement. It constitutes a mandate for the Commission to procure on behalf of, or in the name of, "participating entities." The definition of these entities is broad, encompassing:

  • Union entities: EU institutions, bodies, offices, and agencies.
  • Contracting authorities: Public authorities of Member States.
  • Partner organisations: Entities selected by the Commission to participate in the framework.

This mandate covers all procurement procedures carried out during the agreement's period of validity. It empowers the Commission to conclude framework contracts or operate dynamic purchasing systems specifically for data centre services, cloud computing services, software, and AI systems (Article 37(3)).

Governance: The Steering Committee

While the Commission retains operational control, the agreement establishes a governance structure to ensure strategic alignment with Member States. Article 38(4) mandates the creation of a Steering Committee composed of the Commission and one representative from each participating Member State at the national level.

The Committee's role is strategic, not operational. Under Article 38(5), it is responsible for:

  • Providing strategic oversight of procurement activities.
  • Proposing the strategic direction of the procurement agenda for fixed periods.
  • Approving the strategic direction of each procurement procedure before it is launched by the Commission.

However, Article 38(3) explicitly reserves operational management for the Commission. The Commission alone decides on the launch of procedures, the type of procedure, the contract type, and the award of contracts. It also retains the responsibility for setting fees. This separation ensures that while Member States guide the what and why, the Commission executes the how.

Accession and Flexibility

The framework is designed to be inclusive and flexible. Article 38(6) allows for the agreement to be acceded to by other Member States, Union entities, and partner organisations after its initial entry into force.

  • Non-conditional Participation: Article 38(7) establishes a critical principle: the participation of a contracting authority from a Member State is not conditional on that Member State's participation in the agreement. This allows individual public bodies to join even if their national government has not yet signed the overarching agreement.
  • Conditions for Accession: The Steering Committee sets transparent, non-discriminatory conditions for accession, such as size, minimum amounts, and other objective criteria (Article 38(8)).
  • Dynamic Purchasing Systems: A specific derogation allows participating entities to join a dynamic purchasing system at any point during its validity, provided their cumulative requests do not exceed 50% of the initial estimated quantities (Article 39(5)).

Applicable Law and Obligations

Article 39 provides a "safe harbour" for participating entities. It states 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 under this framework. This means national authorities do not need to run parallel procurement procedures, provided they adhere to the terms of the central agreement.

What this means for you

For legal counsel, procurement officers, and compliance teams within public sector bodies, the Article 38 agreement represents a paradigm shift in acquiring digital infrastructure.

1. Strategic Participation vs. Operational Execution

Your organisation can participate in high-value cloud and AI procurement without managing the tender process itself. By acceding to the agreement, you delegate the operational burden to the Commission while retaining strategic influence through the Steering Committee (if your Member State participates) or by adhering to the strategic direction approved by the Committee. This allows you to focus on internal deployment and integration rather than tendering compliance.

2. Compliance Simplification

The most immediate benefit is the reduction of legal risk. Under Article 39(1), purchasing through the Commission's framework contracts or dynamic purchasing systems automatically satisfies your Union public procurement obligations. You avoid the complexity of navigating national procurement laws for cross-border digital services, provided you strictly follow the procedures outlined in the agreement.

3. Financial Implications

Participation is not free. Article 40 establishes that the costs of the procurement activities are jointly financed by participating entities through fees levied by the Commission. These fees are designed to cover the direct and indirect costs of the procurement activities, including ancillary services. Your organisation must budget for these fees, which are set in advance and are proportionate to the estimated costs. Failure to pay these fees could result in exclusion from the framework.

4. Timeline and Readiness

While the proposal does not set a fixed date for the initial signing of the agreement, Article 38(1) requires it to be in place "before any procurement activity" is carried out. The agreement will define its own period of validity. Public bodies should prepare their internal governance structures to accede to the agreement quickly once it is established, as the Commission may launch procurement procedures immediately upon the agreement's entry into force.

Common misconceptions

"The Commission makes all the decisions." While the Commission manages the operation of procurement (launching tenders, awarding contracts), it cannot act unilaterally on strategy. Article 38(5) requires the Commission to obtain approval from the Steering Committee for the strategic direction of each procurement procedure before it is launched. Member States retain significant strategic oversight.

"Only Member States that sign the agreement can participate." This is incorrect. Article 38(7) explicitly states that the participation of a contracting authority is not conditional on its Member State's participation. A local municipality or a national agency can accede to the agreement independently, provided they meet the conditions set by the Steering Committee.

"The agreement replaces all national procurement laws." The agreement does not abolish national law; it provides a specific derogation for the services procured through the Commission. Article 39(1) deems participation as compliance with Union law, but national authorities must still ensure their internal governance and financial rules align with the agreement's terms. It is a streamlined route, not a total exemption from all regulatory oversight.

Related

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