Summary As proposed in the Cloud and AI Development Act (CADA), the Union added value criterion applies specifically to public procurement procedures for innovative cloud computing services and AI systems. Under Article 32(1), Member State contracting authorities must include this non-price award criterion in these specific tenders to evaluate how much a tenderer contributes to strengthening the European digital supply chain and ecosystem. It does not apply to routine, off-the-shelf cloud purchases, but rather to procurement processes designed to foster technological development and innovation.

Detail

The CADA proposal introduces a mandatory requirement for public authorities to consider European strategic interests when purchasing advanced digital technologies. This mechanism is codified in Article 32, titled "Union added value." To understand the scope, it is necessary to distinguish between the types of procurement to which this rule applies and the types of entities required to comply.

Scope of Application: Innovative Procurement Only

The most critical limitation of this provision is that it applies exclusively to innovative cloud computing services and AI systems. Article 32(1) states:

"In public procurement procedures for innovative cloud computing services and AI systems, contracting authorities shall include, as part of the quality evaluation of the tender, non-price award criteria that allow them to evaluate the tenderer's contribution to the development of a European cloud and AI ecosystem."

This distinction is vital. The CADA proposal differentiates between standard, routine procurement of existing, widely available cloud services and procurement aimed at innovation. The explanatory memorandum and the structure of Title IV indicate that the Union added value criterion is a tool to drive market direction and support emerging European technologies. Therefore, if a contracting authority is purchasing a standard, commodity cloud service where the technology is mature and widely available, Article 32 does not mandate the inclusion of these specific European added value criteria. However, if the procurement is structured as an innovation partnership, a pre-commercial procurement, or a tender for novel AI systems that are not yet standardised, the criterion becomes mandatory.

The goal, as outlined in Recital 68, is to foster technological development, strengthen digital resilience, and enable public authorities to benefit from secure, efficient, and trustworthy digital solutions that evolve with rapidly changing technological needs. By focusing on innovation, the EU aims to signal market direction and encourage the uptake of sovereign, European-developed technologies.

Who Must Comply?

The obligation falls on contracting authorities within the meaning of the Public Procurement Directives. This includes central government bodies, regional and local authorities, and other public entities defined under Directive 2014/24/EU. While the CADA proposal also establishes Union assurance levels for all public cloud procurement (under Articles 29 and 30), the specific Union added value scoring criterion in Article 32 is directed at these national and regional contracting authorities when they engage in innovative procurement.

Union entities (EU institutions, agencies, and bodies) are also subject to the broader autonomy framework, but the specific wording of Article 32(1) targets "contracting authorities," which typically refers to Member State entities. However, the spirit of the regulation, supported by Recital 67, encourages all public buyers to leverage their purchasing power to lower dependencies on third-country providers.

What Is Evaluated?

When applying this criterion, contracting authorities must assess the tenderer's contribution to the European ecosystem. Article 32(3) provides a non-exhaustive list of factors that authorities may evaluate:

  1. Supply Chain Strengthening: The extent to which the tenderer contributes to strengthening the digital technology supply chain in the Union, including the use of software or hardware designed or manufactured in the Union.
  2. Integration of EU Technologies: Whether the tenderer has integrated technologies developed in the Union, including results from Union-funded research and development programmes. This includes the use of tools, standards, specifications, software, or models developed in the Union.
  3. Innovation for Security of Supply: Whether the innovation required to deliver the service contributes to strengthening the security of supply and the development of a European cloud and AI ecosystem.
  4. Hardware Origin: To the greatest extent feasible, whether the service is delivered through critical computing, storage, and networking hardware components designed and/or manufactured in the Union. If this is not feasible, the criterion allows for hardware from a third country that still contributes to strengthening security of supply and the European ecosystem.

Constraints on the Criterion

To prevent protectionism and ensure competition, Article 32 imposes strict limits on how this criterion can be used. Article 32(2) requires that the non-price award criteria:

  • Are linked to the subject matter of the contract.
  • Do not confer unrestricted freedom of choice on the contracting authority.
  • Are expressly set out in the procurement documents or contract notice.
  • Are ancillary and not decisive in the award of the contract.

Furthermore, Recital 67 suggests that contracting authorities could consider a maximum weighting of 15 out of 120 points for this criterion, ensuring it remains proportionate and subordinate to core technical and financial criteria. This ensures that the primary driver for award remains the quality and price of the service, while European added value acts as a tie-breaker or secondary quality factor.

What this means for you

For public-sector procurement officers, this means you must first determine whether your upcoming cloud or AI procurement qualifies as "innovative." If you are renewing a contract for a standard email or storage solution, Article 32 likely does not apply. However, if you are procuring a new AI-driven analytics platform, a sovereign cloud infrastructure pilot, or engaging in an innovation partnership, you are required to include a Union added value criterion in your evaluation matrix.

You must explicitly define how you will score this criterion in your tender documents. You cannot leave it to the evaluators' discretion. You should specify which factors from Article 32(3) you will weigh, such as the percentage of hardware manufactured in the EU or the integration of Union-funded software. Remember, this criterion must not be decisive; it should be a smaller portion of the overall quality score.

Additionally, you must ensure transparency. The criteria must be clear to bidders so they know how to demonstrate their contribution to the European ecosystem. This may require bidders to provide evidence of their supply chain, such as Software Bills of Materials (SBOMs) or declarations of hardware origin.

Common misconceptions

Misconception 1: This applies to all cloud procurements. It does not. Article 32 specifically targets innovative cloud computing services and AI systems. Routine procurement of standard cloud services is subject to the Union assurance levels (Articles 29-30) but not necessarily the Union added value scoring criterion.

Misconception 2: It is a mandatory quota for EU hardware. It is not a quota. Article 32(3)(d) allows for flexibility. If using EU-manufactured hardware is not feasible, bidders can still score points if their third-country hardware contributes to strengthening security of supply and the European ecosystem. The criterion evaluates contribution, not just origin.

Misconception 3: It overrides price and technical quality. It cannot. Article 32(2)(d) explicitly states that these criteria must be "ancillary and not decisive." The primary award must still be based on the most economically advantageous tender, with technical quality and price carrying the most weight. The Union added value is a secondary quality factor.

Misconception 4: Only EU-based companies can win. No. Third-country providers can still win contracts if they meet the technical requirements. However, they may score lower on the Union added value criterion if they do not integrate EU technologies or contribute to the European supply chain. The goal is to incentivise European capabilities, not to ban foreign competition outright.

Related

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