Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission may donate cloud computing services, data centre services, software, and AI systems to Member State contracting authorities, but only in exceptional circumstances. This mechanism is a specific component of the Commission’s role as a "wholesaler" under Article 37(3)(b). Unlike standard procurement or the cost-recovery sharing model of the EuroCloud Federation, this donation power is designed to address acute barriers where standard resale or procurement is not feasible, ensuring that public bodies with limited resources can still access critical digital infrastructure.

Detail

Article 37 of the CADA proposal establishes a comprehensive framework enabling the Commission to act as a central purchasing body and a wholesaler for Union entities and Member State contracting authorities. The primary goal, as outlined in Recital 74, is to harness collective purchasing power to help public bodies overcome "limited financial resources, reduced purchasing power, [and] insufficient technical or procurement expertise."

Within this framework, Article 37(3) explicitly defines the Commission's "wholesaler" capabilities. Specifically, Article 37(3)(b) states that the Commission may:

"acting as a wholesaler by acquiring such services and supplies and reselling them or, in exceptional circumstances, donating them to one or more contracting authorities of Member States."

This provision creates a distinct legal pathway for the transfer of digital assets without direct financial consideration from the recipient. However, the text imposes a rigorous constraint: donations are permitted only in exceptional circumstances. The regulation does not provide an exhaustive definition of "exceptional circumstances" within the article itself. However, the legislative context suggests this is reserved for situations where standard commercial mechanisms (resale) are inappropriate or where specific public interest objectives necessitate non-commercial distribution to ensure access to essential services.

The donation mechanism operates alongside the Commission's standard procurement tools. Under Article 37(3)(a), the Commission typically procures services on behalf of authorities by concluding framework contracts or operating dynamic purchasing systems. The "wholesaler" model in Article 37(3)(b) extends this by allowing the Commission to acquire, stock, and then either resell or donate these services. The recipients of these donations are limited to "one or more contracting authorities of Member States" or "partner organisations selected by the Commission."

It is crucial to distinguish this donation power from the EuroCloud Federation (established under Articles 34–36). The EuroCloud Federation facilitates the sharing of idle capacity between public sector bodies on a cost-recovery basis, where fees are strictly limited to the additional costs incurred for sharing. In contrast, the Article 37 donation model involves the Commission actively procuring new services or supplies and then transferring them without charge. The donation itself does not constitute a "pecuniary interest" or a "public contract" within the meaning of Directive 2014/24/EU, provided it adheres to the specific scope of this wholesaler model.

Furthermore, the underlying procurement by the Commission must still comply with applicable EU public procurement rules, subject to the specific derogations and arrangements set out in Chapter IV (Articles 37–40). While the recipient authority does not pay for the service, it remains bound by the contractual provisions established by the Commission for the use of those services.

What this means for you

For public-sector procurement officers and Member State authorities, the possibility of receiving donated cloud services represents a potential, albeit rare, avenue to access advanced AI and cloud capabilities without incurring direct procurement costs. However, this should not be viewed as a standard procurement route.

  1. Strict Eligibility: You must be a "contracting authority" as defined in Directive 2014/24/EU, or a "partner organisation" specifically selected by the Commission.
  2. The "Exceptional" Threshold: You must be prepared to demonstrate why a donation is necessary in your specific context. Since the regulation restricts this tool to "exceptional circumstances," authorities should anticipate a high bar for justification. This may involve proving a severe lack of financial resources, a critical strategic public interest need that cannot be met through standard procurement, or other unique barriers preventing the use of standard framework contracts.
  3. Process and Governance: Donations will likely be coordinated through the common procurement framework established under Article 38. To benefit, your authority may need to accede to the agreement governing these procurement activities, which is negotiated between the Commission and participating Member States.
  4. Compliance Obligations: While the donation itself is not a public contract, the underlying procurement by the Commission is subject to strict rules. As a recipient, you will be bound by the initial contractual provisions established by the Commission. You cannot unilaterally alter these terms, and you must ensure the services are used in compliance with the original procurement conditions.

Common misconceptions

"The Commission can donate any type of service it procures." Reality: Article 37(3)(b) specifically limits this power to "data centre services, cloud computing services, software and AI systems." It does not apply to general goods or services outside this digital scope. Furthermore, the "exceptional circumstances" condition is a strict legal limit, not a suggestion.

"Donations are a replacement for standard public procurement." Reality: Donations are a niche tool within the wholesaler model. The primary mechanisms for the Commission to assist Member States are framework contracts and dynamic purchasing systems under Article 37(3)(a). Donations are an exceptional alternative to resale, intended for specific, non-routine scenarios.

"Member States can request donations at will." Reality: The Commission retains full discretion over which partner organisations and contracting authorities receive donated services. The selection is based on the specific "exceptional circumstances" and the strategic objectives of the procurement activity, not on a right to request.

"This is the same as the EuroCloud Federation." Reality: The EuroCloud Federation (Articles 34–36) is about sharing existing idle capacity between public bodies on a cost-recovery basis. The Article 37 donation model is about the Commission procuring new services and giving them away. They are distinct legal mechanisms with different financial and operational rules.

Related

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