No proven harm to EU budget means no correction

Lietuvos vyriausiasis administracinis teismas, in its judgment of 14 October 2026 in administrative case No. eA-610-821/2026, upheld the appeals of Vilniaus miesto savivaldybės administracija and SĮ "Vilniaus miesto būstas", set aside the Regionų administracinis teismas judgment of 10 February 2025, and annulled the 28 November 2023 decision No. IT01 of VšĮ Centrinė projektų valdymo agentūra (CPVA)Teismai, which had imposed a 25 per cent financial correction on the "Socialinio būsto plėtra" projectTeismai. The dispute concerned a sale contract of 26 June 2019 under which the municipality bought a flat in a negotiated tender for EUR 61,000. CPVA found that the flat's area in the Nekilnojamojo turto registras was 42.53 sq. m, more than 10 per cent above the tender-conditions clause 7.1.3.3 one-room limit with its 10 per cent tolerance (at most 38.50 sq. m), so the winning bid should have been rejected under clause 40.14 and its acceptance breached transparency and equal treatment.

The first-instance court dismissed the municipality's application, holding that even a small excess over the area limit breaches a mandatory tender term, gave the winner an unjustified advantage, and justified a proportionate 25 per cent correction under point 14 of table 2.2 of the European Commission guidelines. The appellate panel disagreed, but not on the area mismatch itself: the appellants essentially did not dispute that the flat failed the tender conditions, nor did they contest that the breach is not de minimis.

The decisive issue was the legal basis for any financial correction. The panel stated that under Article 2(36) of Regulation (EU) No 1303/2013 an irregularity means only a breach through which harm to the Union budget is or could be causedTeismai, and under Article 143(2) the Member State applies a correction proportionate to the nature, gravity and financial loss to the funds. Relying on the Court of Justice judgment of 4 October 2024 in C-175/23 Obshtina Svishtov and the extended LVAT panel judgment of 29 April 2026 in case No. eA-39-789/2026, the panel held that the possibility of harm cannot be presumedTeismai: it must be substantiated and individualised through the competitive setting of the specific tender, bidder participation opportunities and activity, whether competition was real, and how the breach could have affected the use of fund resourcesTeismai.

The CPVA decision contained no such reasoningTeismai: it did not state what effect the formal area breach had on the Union budget, nor did it explain with individualised legal arguments why the exact ineligible amount could not be calculated and a flat-rate correction was therefore used. In the panel's assessment the agency automatically equated the established breach with budgetary harm, contrary to Article 2(36)Teismai, and therefore had no legal or factual basis to decide on a correctionTeismai. For that reason the proportionality of the chosen 25 per cent rate was not examined separately as redundant, while the opened irregularity procedure remains unfinished and CPVA must adopt a new decision closing it. The judgment is not subject to appeal.

Legal basis: Article 2(36) and Article 143(2) of Regulation (EU) No 1303/2013; Article 17(1) of the Viešųjų pirkimų įstatymas.