Summary Under the proposed Cloud and AI Development Act (CADA), fees charged for sharing cloud or data centre services within the EuroCloud Federation are legally excluded from being classified as a "pecuniary interest" if they are strictly limited to cost recovery. Article 35(5) explicitly states that such fees do not constitute a pecuniary interest within the meaning of Article 2 of Directive 2014/24/EU and Regulation (EU, Euratom) 2024/2509. This exclusion is the critical legal basis that allows public sector bodies to share infrastructure directly without triggering EU public procurement rules, provided the fees cover only additional costs incurred for sharing, such as resource isolation, access management, and compliance.

Detail

The EuroCloud Federation, established under Article 34 of the proposed CADA, creates a mechanism for Union entities and public sector bodies to share data centre and cloud computing services. A central legal hurdle for such public-sector cooperation is determining whether the exchange of services constitutes an economic activity subject to public procurement law. CADA resolves this by defining the financial relationship between the "sharing entity" and the "using entity" as non-economic in nature, provided specific conditions are met.

The Legal Basis for Exclusion

The primary legal anchor for this exclusion is found in Article 35(5) of the proposal. It states:

"The sharing entity may charge a fee to the using entity. The amount of the fee shall be limited to the costs that the sharing entity incurs in relation to the sharing of the service and shall not constitute a pecuniary interest within the meaning of Article 2 of Directive 2014/24/EU and Regulation (EU, Euratom) 2024/2509."

By explicitly referencing the definition of "pecuniary interest" in the Public Procurement Directive and the EU Financial Regulation, CADA ensures that the fee arrangement falls outside the scope of "public contracts." If a payment is not considered a pecuniary interest, there is no contract of an economic nature, and therefore no obligation to follow competitive tendering procedures. This legislative drafting technique effectively creates a statutory carve-out for intra-public sector sharing, distinguishing it from commercial transactions.

Conditions for the Exclusion

This exclusion is not automatic; it is conditional on the nature and calculation of the fee. The proposal clarifies these conditions in the text of Article 35 to ensure the arrangement remains a public-sector cooperation governed solely by considerations of public interest.

  1. Cost-Limitation: The fee must be strictly limited to the costs incurred by the sharing entity in relation to the sharing of the service. It cannot include profit margins, general overheads unrelated to the specific sharing activity, or capital appreciation.
  2. Specific Cost Categories: The proposal specifies that recoverable costs are limited to "additional costs incurred in the sharing of capacity." As detailed in the explanatory context of Article 35, these include:
    • Allocating and isolating resources.
    • Managing access.
    • Enabling the integration and interoperability of resources.
    • Ensuring compliance with applicable Union law requirements.
    • Managing the sharing relationship itself.

Distinction from Commercial Activity

The proposal emphasizes that the sharing of services within the EuroCloud Federation is anchored in public-sector cooperation. Recital 73 of the explanatory memorandum reinforces that this cooperation "should be governed solely by considerations of public interest, and should not entail any form of consideration in exchange for another." The fee is merely a mechanism to reimburse the sharing entity for the marginal costs of providing the service to another public body, preventing one public entity from bearing the full cost of infrastructure that benefits multiple entities.

Because the fee is not a "consideration for the provision of a service" in the commercial sense, it does not create a supplier-buyer relationship. Instead, it maintains the relationship as one of mutual public service delivery. This distinction is vital for maintaining the sovereignty and public-order objectives of the EuroCloud Federation, as it prevents the marketization of critical public infrastructure sharing.

Scope of Application

This legal basis applies specifically to members of the EuroCloud Federation. The sharing entity must be a Union entity or public sector body that directly or indirectly owns the hardware through which the service is made available, as defined in Article 35(1). The fee structure must be transparent and documented to demonstrate that it adheres to the cost-recovery principle, ensuring that if challenged, the arrangement can be proven to lack a pecuniary interest.

What this means for you

For in-house counsel and compliance officers managing public sector IT infrastructure, this provision offers a significant opportunity to optimize resource utilization without navigating complex procurement procedures. However, strict adherence to the cost-recovery model is mandatory.

  • Audit Trails: You must maintain detailed accounting records that isolate the "additional costs" of sharing. General overheads or capital depreciation that would exist regardless of the sharing arrangement may not be included in the fee. The fee must reflect the marginal cost of the specific using entity's access.
  • Contractual Frameworks: Agreements between sharing and using entities should explicitly reference Article 35(5) and state that the fee is for cost recovery only, not a commercial payment. This helps defend against any potential challenges that the arrangement is a disguised public contract.
  • No Profit Motive: Ensure that the fee calculation methodology does not generate a surplus. If the fee exceeds the actual additional costs incurred, the arrangement risks being reclassified as having a pecuniary interest, which would retroactively trigger public procurement obligations and potentially invalidate the agreement.
  • Compliance with Union Law: The recoverable costs include ensuring compliance with Union law. Ensure that any costs associated with meeting sovereignty, cybersecurity, or data protection requirements for the shared service are accurately captured and allocated.

Common misconceptions

"Any fee charged in EuroCloud is exempt from procurement rules." Incorrect. The exemption only applies if the fee is strictly limited to the additional costs incurred for sharing. If a public body charges a market-rate price or includes a profit margin, it constitutes a pecuniary interest, and standard public procurement rules under Directive 2014/24/EU apply.

"EuroCloud sharing is free of charge." Incorrect. While the underlying cooperation is non-commercial, Article 35(5) explicitly allows the sharing entity to charge a fee. The key is that the fee is for cost recovery, not that it is zero. Refusing to charge for actual additional costs could distort competition or unfairly burden the sharing entity.

"This applies to all cloud service sharing between public bodies." Incorrect. This specific legal basis for excluding pecuniary interest applies specifically to sharing within the EuroCloud Federation as established by Article 34. Sharing arrangements outside this framework may still be subject to procurement rules unless they qualify under other existing exceptions in national or EU law.

Related

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