Court annuls €569,435 correction: no proof EU budget was harmed

On 28 October 2026Teismai the Lietuvos vyriausiasis administracinis teismas granted Klaipėda municipality's appeal in case eA-636-821/2026Teismai: the municipality had breached procurement rules by leaving its works contractor without a performance guarantee and civil-liability cover (CAD) for 15 monthsTeismaiTeismai, but the Centrinė projektų valdymo agentūra (CPVA) decision imposing a 10 per cent correction of 569,435.46 Eur was annulledTeismaiTeismaiTeismai, because it never showed how the breach could have harmed the Union budgetTeismai. The ruling is final.Teismai

The municipality's courtyard-renovation contract No J9-391 of 29 January 2020 with UAB "VVARFF" was worth 5,845,654.37 Eur with VAT (5,694,354.59 Eur under the project). The contract required the performance guarantee and the CAD to remain valid for the whole performance period until the completion act or declaration.Teismai Performance was twice extended — to 28 August and 30 November 2022 — and twice suspended, with final completion declared on 4 May 2023. The guarantees, however, expired on 4 February 2022TeismaiTeismai, so site works continued uninsured for 15 monthsTeismai, including in the third zone where some work stages had not even started. CPVA decision IT01 of 4 October 2023 treated tolerating this gap as a substantial modification of clauses 11.1 and 12, breaching VPĮ 89(1)(5) and the 17(1) equal-treatment and transparency principles; the Regionų administracinis teismas agreed on 10 February 2025.

The panel agreed the breach was correctly established.Teismai Letting the contractor off the obligation to renew or replace the guarantees for 15 months eased the contract terms within the meaning of VPĮ 89(4)(1) and (2): had the softened terms been in the original tender, other bids could have been accepted or more suppliers attracted — 18 suppliers had followed the notice and three bid — and the economic balance shifted in the contractor's favour, avoiding renewal costs and risks. Its breach defences failed: the contractor's original 8,941.97 Eur two-year cover price proved nothing about renewal cost after the pandemic, inflation shocks and its deteriorating margins, with 191 suspended days raising the insured risk; and completed works without a claim do not erase a principles breach, since procurement infringements cannot be dismissed as trivial for lack of visible direct harm.

A financial correction under Reglamento (ES) Nr. 1303/2013 143 requires an irregularity within Article 2(36): a breach of Union or related national law through an economic operator's act or omission by which the Union budget has been or could be harmed. Following the ESTT judgment in Obshtina Svishtov (C-175/23), that harm — or its realistic possibility — must be demonstrated and individualised through the specific procurement's competitive setting, not presumedTeismai; a formal breach finding alone cannot support a correctionTeismai. CPVA's decision contained no such reasoningTeismai, so it lacked a legal and factual basis for deciding on a correction at allTeismai and breached the Viešojo administravimo įstatymas 10(5)(5) and (6) statement-of-reasons requirements. The first-instance judgment fell with it. The infringement procedure itself remains open: CPVA must complete it and adopt a new decision.

The panel also rejected the municipality's costs claim. A successful party may recover counsel fees, but a public body must show why external counsel was necessary given its internal capacity, and the municipality offered no evidence on that point.

Legal basis: the ruling applies VPĮ 17(1) and 89(1)(5) with 89(4), Reglamento (ES) Nr. 1303/2013 2(36) and 143, Administracinių bylų teisenos įstatymas 144(1)(2) and 40(1)(5), and Viešojo administravimo įstatymas 10(5)(5)(6).