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EU funding: although contracting authorities are bound by mandatory requirements when drafting technical specifications, a breach of those requirements does not in itself relieve the managing authority of its obligation to assess the actual impact on competition before imposing a financial correction.

The Supreme Administrative Court of Lithuania (SACL) examined a case concerning a decision of the Central Project Management Agency (CPMA) to reduce EU funding payable to the Panevėžys City Municipality Administration by EUR 13,934.07. The reduction was based on the finding that, when describing the subject matter of the procurement, the contracting authority referred to specific technical standards without indicating that equivalent solutions would also be accepted. According to CPMA, this infringed the obligation to ensure equal treatment of suppliers and effective competition.

In its judgment of 29 April 2026, the extended panel of judges of SACL held that where a contracting authority defines the subject matter of a procurement by reference to a particular standard, it is required to include the words "or equivalent". This obligation is laid down both in Directive 2014/24/EU and in the Lithuanian Law on Public Procurement.

Where no such reference is included, the procurement documents must be interpreted as excluding equivalent solutions. Consequently, even if a supplier's proposed solution could objectively be regarded as equivalent, it could not be treated as complying with the technical specifications. To conclude otherwise would amount to amending the procurement conditions after the procurement had been launched, contrary to the principles of transparency and equal treatment.

Having found that the contracting authority had failed to state clearly and unambiguously in the procurement documents that equivalent solutions would be accepted, the extended panel concluded that CPMA had correctly established an infringement of Article 37(4)(2) of the Law on Public Procurement, as well as the principles of equal treatment and non-discrimination laid down in Article 17(1) of that Law.

At the same time, however, the Court emphasised that a financial correction under Regulation (EU) No 1303/2013 may be imposed only where it is established that the breach of public procurement rules has caused, or could have caused, damage to the budget of the European Union.

While the exact amount of financial impact does not have to be proven, the possibility of such damage cannot simply be presumed. It must be specifically substantiated on the basis of the circumstances of the individual procurement procedure. This requires an assessment of factors such as the opportunities for suppliers to participate, the level of actual competition, the extent to which the procurement breach may have affected the use of EU funds, distorted competition, or resulted in the selection of a less economically advantageous tender, as well as an evaluation of the likely outcome had the infringement not occurred.

The Court held that the mere identification of a formal breach of public procurement rules, without assessing its potential impact on the EU budget, is not sufficient in itself to establish an irregularity within the meaning of Regulation (EU) No 1303/2013 or to justify the application of a financial correction.

Since CPMA had failed to provide any reasoning in its decision demonstrating how the identified procurement infringement had affected, or could have affected, the EU budget, the extended panel concluded that the Agency lacked both a legal and a factual basis for imposing the financial correction. Accordingly, the contested decision was annulled.

Administrative case No. eA-39-789/2026