Summary Under the proposed Cloud and AI Development Act (CADA), the European Commission holds the exclusive authority to select partner organisations for joint procurement activities. These organisations must be drawn from the categories defined in Article 168(3) of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation). Once selected by the Commission, these entities are formally designated as 'participating entities' alongside Union institutions and Member State contracting authorities. This centralised selection ensures that only vetted partners with a specific public-interest mandate can access the Commission's central purchasing services, streamlining procurement while maintaining strict strategic oversight.

Detail

The governance of joint procurement under CADA is designed to pool purchasing power across the Union while maintaining clear lines of accountability and strategic alignment. The primary legal basis for this structure is found in Article 37 of the proposal, which outlines the conditions under which the Commission may carry out procurement activities for data centre services, cloud computing services, software, and AI systems.

Exclusive Selection Authority

Article 37(1) explicitly states that "partner organisations referred to in Article 168(3) of Regulation (EU, Euratom) 2024/2509 selected by the Commission may also participate in the procurement activities set out in this Chapter." This provision establishes two critical points for compliance officers and legal teams:

  1. Source of Eligibility: Partner organisations are not open to all private entities. They must fall within the specific categories outlined in Article 168(3) of the Financial Regulation. This typically includes entities that are not public authorities but are entrusted with tasks of public interest or have a public service mission, provided they meet strict non-profit and public control criteria. The CADA proposal does not expand this definition; it relies entirely on the existing Financial Regulation framework.
  2. Selection Power: The power to select these organisations rests solely with the European Commission. There is no automatic right to participation based merely on meeting the eligibility criteria. Instead, it is a discretionary selection process managed by the Commission to ensure that participating partners align with the strategic objectives of the CADA procurement framework, such as strengthening the Union's cloud and AI ecosystem.

Status as Participating Entities

Upon selection, the legal status of these partner organisations changes significantly. Article 37(1) continues by stating that "Contracting authorities of Member States, Union entities, and partner organisations selected by the Commission, shall be considered as 'participating entities' under this Chapter."

This classification is vital because it grants these partner organisations the same procedural rights and obligations as public contracting authorities within the CADA framework. As 'participating entities,' they can:

  • Request the Commission to procure services on their behalf.
  • Access framework contracts and dynamic purchasing systems established by the Commission.
  • Benefit from ancillary support services, such as technical infrastructure and advice on procurement procedures, as detailed in Article 37(4).

Governance and Oversight

The selection and ongoing participation of these entities are governed by a structured agreement between the Commission and Member States, as outlined in Article 38. This agreement establishes a Steering Committee composed of the Commission and representatives of Member States. While the Steering Committee provides strategic oversight and approves the strategic direction of procurement activities, the operational management and the specific selection of partner organisations remain the responsibility of the Commission.

Article 38(4) notes that the Steering Committee may appoint additional representatives of partner organisations. This implies that once selected, these entities gain a voice in the strategic oversight of the procurement agenda, further integrating them into the EU's digital infrastructure ecosystem. However, their governance role is distinct from that of Member States, who hold the primary representation on the Committee.

Financial Implications

Participation is not free. Article 40 of CADA mandates that costs arising from procurement activities are jointly financed by participating entities through fees levied by the Commission. Therefore, the selection of a partner organisation also triggers a financial obligation. The Commission sets fees to cover direct and indirect costs, including the development of the common procurement platform. These fees constitute internal assigned revenues for the EU budget. Compliance officers must ensure their organisations have the budgetary capacity to meet these fee obligations as part of the participation agreement.

What this means for you

For in-house counsel and compliance officers at organisations that may qualify as partner organisations (e.g., public-interest bodies, research institutions, or specific non-profits), the implications are significant:

  1. Proactive Engagement with the Commission: Since the Commission holds exclusive selection power, you cannot simply apply to join. You must monitor Commission announcements and expressions of interest. Building a relationship with the Commission's procurement units and demonstrating alignment with CADA's strategic goals (sovereignty, resilience, innovation) will be crucial for selection.
  2. Contractual and Financial Planning: Once selected, your organisation becomes a 'participating entity.' This triggers immediate financial obligations under Article 40. You must budget for the fees levied by the Commission, which are calculated to cover the Commission's operational costs. Failure to pay these fees could result in exclusion from the procurement framework.
  3. Compliance with Procurement Rules: As a participating entity, you are bound by the rules set out in the agreement under Article 38. This includes adhering to the strategic direction set by the Steering Committee and complying with any ancillary support service requirements. Ensure your internal procurement teams are trained on the specific procedures for accessing Commission-led framework contracts.
  4. Governance Representation: If your organisation is selected, you may have the opportunity to appoint a representative to the Steering Committee under Article 38(4). This is a strategic advantage, allowing you to influence the procurement agenda and ensure that the services procured meet your specific operational needs.

Common misconceptions

  • "Any private company can apply to be a partner organisation." Incorrect. Partner organisations are strictly limited to those defined in Article 168(3) of the Financial Regulation. This excludes standard commercial cloud providers or for-profit tech companies. The pool is limited to entities with a public interest mandate or specific non-profit status.

  • "Selection is automatic if you meet the Financial Regulation criteria." Incorrect. Meeting the criteria in Article 168(3) makes you eligible, but Article 37(1) specifies that the Commission selects the partner organisations. It is a discretionary process, not an automatic entitlement.

  • "Partner organisations have the same rights as Member States." Partially incorrect. While they are treated as 'participating entities' for procurement purposes, they do not have voting rights in the Steering Committee in the same way Member States do. Article 38(4) states the Steering Committee is composed of the Commission and Member State representatives, with the possibility of appointing additional representatives from partner organisations. This distinction is crucial for understanding the balance of power in the governance structure.

Related

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