By Balticnews.com.
The Pauls Stradiņš Clinical University Hospital’s A2 Building has become one of the costliest and most complicated European Union-financed infrastructure projects in Latvia. Its price has climbed from an original €88.1 million to €157.4 million, construction is running more than six years behind the initial March 2023 deadline, the original contract was terminated, the project has been hit with €5.56 million in financial corrections, and funding earmarked for another hospital building at the same site has been redirected to finish it. [1][10][12][14]
Official replies now clarify several issues that had not previously been explained in public. Latvian authorities publicly disclosed information about the content of the two Irregularity Management System (IMS) notifications submitted to the European Commission – one concerning an implementation shortfall, the other a procurement-rules violation. A 2025 national audit separately found that part of the project’s expenditure is ineligible for EU financing. The replies also make clear that responsibility for project implementation, procurement, financial corrections and day-to-day management rested with Latvian authorities rather than the European Commission. In addition, a coordinator on the European Parliament’s Committee on Budgetary Control (CONT) says the publicly documented facts could be sufficient grounds for parliamentary scrutiny. [21][22][24][27]
How the institutions responded
To establish how Latvian and European institutions viewed the project, Balticnews.com requested official comments from the European Commission, OLAF, Latvia’s Ministry of Finance, the European Court of Auditors, the EPPO and the European Parliament. Their replies, reproduced and summarised below, provide the clearest picture yet of how responsibility for the project is viewed by the institutions involved.
OLAF confirms Latvia formally reported the irregularities
OLAF was the first to confirm that Latvia had met its reporting obligations. Deputy Spokesperson Chris Jones, in a reply cleared “to be attributed to the OLAF press office,” stated:
“OLAF can confirm that, in compliance with their obligations under Article 122(2) of Regulation (EU) No 1303/2013, the Latvian authorities notified the Commission, via the Irregularity Management System managed by OLAF, of irregularities detected in relation to this project. As Member States remain the owners of the reported data, we would suggest contacting the Latvian anti-fraud coordination service (AFCOS) directly if you need additional or more specific information.” [21]
OLAF added a single further line – “OLAF has no further comment to make” [21] – before referring Balticnews.com to Latvia’s own AFCOS function. This confirmation became the starting point for the next phase of Balticnews.com’s investigation.
Ministry reveals the exact content of both EU notifications
Latvia’s Ministry of Finance, which performs the national AFCOS coordination role, gave by far the most detailed answers of any institution approached – prepared jointly with the Central Finance and Contracting Agency (CFLA) and the Audit Authority (Revīzijas iestāde), dated 3 July 2026 and signed by Elita Rubesa-Voravko, Deputy Director of the Communications Department [27]. The following section is based on the Ministry’s written reply, translated from Latvian by Balticnews.com.
First notification: implementation shortfall
Latvian authorities publicly disclosed information about the content of the two IMS notifications submitted to the European Commission. Reporting through IMS is required under Commission Delegated Regulation (EU) 2015/1970 whenever an irregularity’s financial impact exceeds €10,000. The Ministry confirmed two such cases in Project No. 9.3.2.0/17/I/013. The first, reported on 21 August 2025, concerned “failure to meet established implementation conditions,” after an on-site inspection found it “was not possible to verify the volumes of construction materials that had been delivered but not yet installed.”
Second notification: procurement breach
The second, reported on 12 June 2026, concerned “a procurement-rules violation” – specifically, non-compliance with Section 61, Paragraph 3, Clause 3 of the Public Procurement Law [27].
2025 audit found ineligible expenditure
Separately from the IMS notifications, Latvia’s Audit Authority conducted two audits of the project, in 2023 and 2025. The earlier audit “provided preventive guidance aimed at reducing possible risks in project implementation.” The 2025 audit went further, identifying risks in “project implementation and performance of the construction contract” and shortcomings that led to part of the project’s expenditure being “found ineligible for financing from EU funds,” alongside recommendations to address them. Reports on both audits were sent to CFLA and, for information, to PSKUS, the Ministry of Finance, the State Treasury and the Ministry of Health [27].
Ministry: the irregularities were not systemic
Asked whether the notifications corresponded to CFLA’s financial corrections, the Ministry confirmed that the Commission is notified via IMS specifically about irregularities for which CFLA has already adopted a decision establishing the irregularity and applying a financial correction — meaning both reported cases fall within that already-corrected total — adding that other cases not qualifying as irregularities were not reported. Asked whether the irregularities pointed to broader governance problems, the Ministry was unambiguous: “the irregularities were assessed as individual cases, as they involve different factual circumstances and legal grounds. No systemic character was found in relation to the violations.” [27]
AFCOS coordinates — it does not investigate
The Ministry stressed that Latvia’s AFCOS function – carried out by a single staff member within the Ministry’s EU Funds Audit Department – coordinates cooperation with OLAF but “does not itself carry out investigations or audits, but functions as a coordinating mechanism.” Investigations are a matter for law-enforcement bodies; audits are the responsibility of the competent audit authorities [27].
Latvian authorities were responsible for project implementation
The European Commission’s position, conveyed through its Directorate-General for Communication on behalf of DG REGIO, can be summarised as follows: implementation, procurement, financial corrections and day-to-day management of the project are matters for Latvia, not Brussels. [22] In other words, the European Commission makes clear that responsibility for how the project was managed rests with Latvian institutions.
The Commission’s reply makes clear that Brussels does not supervise individual procurement procedures or construction contracts. Instead, its role is to verify that Latvia’s management and control systems comply with EU cohesion policy rules. Under cohesion policy’s shared-management model, the Commission said, Member States select, manage and oversee their own projects, while Brussels checks that national systems comply with EU rules at a general level – it does not review individual project decisions, conduct project-level eligibility checks, or comment on ongoing national audits. The Commission also noted that all three funding applications underwent independent JASPERS review and were approved [22].
Contract disputes remain national responsibility
Contractual matters – including the subcontractor-payment disputes – the Commission said, fall under national law and are handled by Latvia’s authorities [22].
European Commission: responsibility for implementation rests with Latvian authorities
The European Commission’s reply is explicit on this point: responsibility for implementation – including cost and timeline oversight – rests with Latvia’s managing authority and the project’s beneficiary, not with Brussels [22]. Within Latvia’s own governance structure, those roles are formally assigned. The Ministry of Finance acts as the managing authority, and Pauls Stradiņš Hospital (PSKUS) is the beneficiary that ran the procurement procedures under its own registration numbers [12][13]. The Ministry of Health, meanwhile, is formally named the project’s “responsible institution” in the audit reporting structure [27].
Taken together, the official replies indicate that responsibility for project implementation and day-to-day management rested with Latvian institutions – which in turn raises the question of how, over several years, this responsibility allowed such a substantial cost increase, the termination of the original contract, financial corrections and the diversion of funding from the B Building project.
European Court of Auditors takes note of the information
The European Court of Auditors confirmed that the PSKUS A2 project “has not been in the sample of projects audited for our Annual Report so far,” but that the information supplied by Balticnews.com has been shared internally. Senior Communication Officer Claudia Spiti wrote:
“I have shared the information provided with the competent audit department, which can take it into account when planning future audits.” [23]
She added that the Court “is not competent to handle individual complaints” and pointed instead to OLAF and EPPO for that purpose [23].
EPPO neither confirms nor denies involvement
The European Public Prosecutor’s Office gave its standard reply for any potential case. Press Officer Paula Telo Alves wrote: “As a general rule, the EPPO does not comment on ongoing investigations, nor do we publicly confirm which cases we are working on.” [25] The response neither confirms nor rules out EPPO’s involvement.
CONT coordinator sees grounds for closer parliamentary scrutiny
The most substantive engagement with the merits of the case came from Tomáš Zdechovský, Member of the European Parliament and the EPP’s Coordinator on the Committee on Budgetary Control (CONT).
Why CONT could become interested. Zdechovský said CONT would generally have reason to seek further information from the Commission where a project raises questions about “the legality, regularity, economy, efficiency or effectiveness of the use of EU funds.” [24] He set out why PSKUS A2 could meet that bar: substantial ERDF co-financing – originally €140.4 million in total investment, including an €83.7 million ERDF contribution – set against publicly reported cost increases, termination of the original contract, construction defects, repeated procurement procedures and additional financing [24]. On that basis, he said, “CONT could therefore seek clarification from the Commission on whether it is aware of the current financial and implementation status of the project, whether any irregularities or financial corrections have been reported, how it assesses the functioning of the Latvian management and control system for this project, and whether the reallocation of funds affects the original objectives of cohesion policy.” [24]
Could the project reach the European Parliament? “Yes, in principle it could,” Zdechovský wrote, when asked whether the case could justify a parliamentary hearing or exchange of views. Cost overruns alone, he cautioned, “do not automatically constitute an irregularity or fraud” – but combined with the contract termination, repeated procurement, financial corrections and the reallocation of funding from another healthcare project, these become “circumstances that may be relevant for parliamentary scrutiny from the perspective of sound financial management.” [24] He singled out the reallocation from the future B Building project as “particularly relevant, as it may raise questions about whether addressing problems in project A2 is weakening other healthcare investment priorities.” [24]
When would the European Court of Auditors step in? CONT “cannot instruct the European Court of Auditors to carry out a specific audit,” Zdechovský noted, since the ECA is independent. He identified the factors that would generally support such a request: significant exposure of the EU budget, a clear risk to sound financial management, issues extending beyond a single local dispute and suggesting possible systemic concerns, well-documented facts based on public or official sources, and the potential added value of an audit for improving the future management of EU funds [24].
Applied to PSKUS A2, he pointed to the scale of EU co-financing, the cost increases, the delayed timetable, the contract termination, repeated procurement procedures, the reported financial corrections and the reallocation of funding from the B Building project – noting that public sources put the original budget “at approximately EUR 88 million, whereas at least an additional EUR 80 million is now reportedly required to complete the project, bringing the total cost to more than EUR 160 million.” [24]
How the project grew from €88 million to €157 million
The increase from the original €88.1 million budget to the current €157.4 million estimate was not the result of a single decision but of a series of events that unfolded over several years. The original construction contract, worth €88.1 million, was terminated on 13 February 2024 following a dispute over the works. A new procurement procedure, challenged by a losing bidder and confirmed only after a re-evaluation in spring 2026, resulted in a new contract with consortium “NSHC Group” worth approximately €96.8 million, plus €4.76 million in additional works. Before the construction site was transferred to State Real Estate (VNĪ), a further €14.9 million was spent on emergency works, financial corrections, direct payments to subcontractors and legal costs. In addition, €67.9 million originally allocated for the hospital’s future B Building has been reallocated to complete the A2 Building instead. [1][5][10][12][14]
The project began with the first EU funding application in 2018, followed by a second application in 2022. The original completion deadline of March 2023 was missed, and after the original construction contract was terminated in February 2024, a third EU funding application followed later that year. Latvia submitted the first IMS notification to the European Commission on 21 August 2025. In the same year, the Audit Authority found part of the project’s expenditure ineligible for EU financing. A second IMS notification followed on 12 June 2026. Completion of the A2 Building is now scheduled for December 2029, bringing the total estimated project cost to €157.4 million. [1][10][14][21][27]
New tender: an arithmetic error and Velve’s court challenge
On 5 March 2026 it emerged that the open tender for completing the A2 Building, launched by State Real Estate (VNĪ), had drawn three bids: SIA “AIMASA” (€114.07 million), the “NSHC Group” consortium (originally €101.56 million) and “SNL Būve” (€133.65 million). The evaluation commission ranked the NSHC Group bid as the most economically advantageous, awarding it 91.6 points. [28]
The commission then found an arithmetic error in the winning bid: after correction, the NSHC Group price rose from €101.56 million to €120.37 million — an increase of almost €19 million. AIMASA has filed a complaint with the Procurement Monitoring Bureau (IUB) contesting the result, and the complaint has been accepted for review. [28]
A separate legal challenge is under way: Velve, whose original A2 contract was terminated in February 2024, has filed suit with the Administrative District Court against IUB’s 8 January decision rejecting its complaint about the VNĪ-run tender. Velve is asking the court to annul that decision and to bar signature of the new contract until a ruling is issued, arguing the unclear procurement could cost the state tens of millions of euros. [28]
Earlier in the same procurement process, Velve was the only bidder to file a complaint with IUB; the bureau reviewed it and allowed the tender to proceed, finding the documentation and process compliant with regulatory requirements. [28]
Separately, on 24 February the government approved letting the A2 Building’s second-stage financing exceed the usual 90% cap on advance and interim payments. Without the exemption, the hospital would have had to find roughly €11 million in pre-financing itself — something the Ministry of Health says PSKUS cannot do without risking insolvency. [28]
Subcontractors: forgotten on site
While state and EU institutions debate reports and audits, the picture on the ground looks different. SIA “Steel Constructor MM”, a Latvian-owned supplier and installer of structural steel, has publicly described how, two years after the main contract was terminated, its firm is still waiting to be paid — even though its own work, roughly 95% of what the contract required, was practically finished. [29]
The company signed its contract for structural-steel supply and installation in late 2020, with an original completion target of autumn 2021. Covid-era supply disruptions and later the war in Ukraine drove steel prices sharply higher and repeatedly halted work. The company says costs on some line items rose from a planned €600,000 to nearly €2 million. [29]
According to the company, the process stalled halfway after the main contract was terminated: without completed as-built documentation, acceptance certificates and inspections, it is unclear who will take responsibility for the work already done and its warranties. Unpaid retention money held back stands at around €140,000, and the site still holds already-purchased but unmounted steel structures worth around €40,000 that cannot be used elsewhere. [29]
The company says that in preparing the new tender, nobody contacted the subcontractors who had already completed most of the work to establish what was actually done and what remained — while public statements floated the idea that parts of the building might have to be demolished and rebuilt. [29]
What happens next?
The official replies answer several questions that had remained unclear for years. They establish, for the first time, the exact content of the two IMS notifications submitted by Latvia, confirm that part of the project’s expenditure has been found ineligible for EU funding, and make clear that responsibility for implementation, procurement and day-to-day management rested with Latvian institutions rather than the European Commission.
Three important questions, however, remain open.
The first is whether the project will attract further scrutiny at European level. While the European Court of Auditors has shared the information with its audit department and the European Parliament’s CONT coordinator says the documented facts could justify parliamentary scrutiny, neither institution has indicated whether any formal action will follow.
The second concerns the future of the hospital’s planned B Building. The A2 Building is now expected to be completed — albeit years late and at significantly higher cost — but the €67.9 million originally allocated for B Building has been redirected to finish A2. No timetable or financing plan for B Building has been announced. If that reallocation ultimately becomes permanent rather than temporary, the consequences will extend beyond a single delayed construction project and raise broader questions about how Latvia prioritises major healthcare investments financed with public and EU funds.
The third concerns political and institutional accountability inside Latvia. If, as the European Commission and the Ministry of Finance’s own reply confirm, responsibility for implementation and day-to-day management rested with Latvian authorities, it is fair to ask why that responsibility has not yet produced concrete findings on the roles of the Ministry of Health, named as the project’s “responsible institution,” and the Ministry of Finance, the managing authority — and whether either ministry has assessed its own conduct as critically as it has assessed the former contractor.
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Sources and references
Media and public-registry sources cited in Balticnews.com’s questions to EU institutions:
[1] db.lv / LETA, 13.05.2026 — https://www.db.lv/zinas/plano-atlaut-slegt-1288-miljonu-eiro-ligumu-par-stradina-slimnicas-a2-ekas-otra-posma-buvniecibu-526449
[2] LSM.lv, 29.04.2026 — https://www.lsm.lv/raksts/zinas/latvija/29.04.2026-valsts-nekustamie-ipasumi-pec-atkartota-izvertejuma-apstiprina-stradina-slimnicas-a2-korpusa-iepirkuma-rezultatus.a645016
[3] apollo.lv — https://www.apollo.lv/8433431/buvfirma-iesniegusi-sudzibu-stradina-slimnicas-a2-korpusa-buvdarbu-pabeigsanas-iepirkuma
[4] puaro.lv — https://www.puaro.lv/ietekme-un-nauda/kurs-atbildes-par-nodoklu-maksatajiem-uzkrautajiem-papildu-simts-miljoniem-eiro
[5] la.lv — https://www.la.lv/par-stradina-kliniskas-universitates-slimnicas-a2-korpusa-atklato-konkursu-jau-iesniegta-sudziba-iub
[7] tvnet.lv — https://www.tvnet.lv/8410448/as-un-lpv-prasa-veselibas-ministra-skaidrojumus-par-buvniecibas-sadardzinajumu-stradinos
[8] la.lv — https://www.la.lv/cilveki-mirs-jo-ministrija-un-slimnica-nespej-novadit-vienu-projektu-medicinas-nozare-notiekosais-nebeidz-parsteigt
[9] puaro.lv — https://www.puaro.lv/ietekme-un-nauda/vm-sevi-paslave-par-150-stradinu-slimnicas-buves-sadardzinajumu-kuru-buves-astonus-gadus
[10] la.lv — https://www.la.lv/stradina-slimnicas-a2-korpuss-varetu-izmaksat-gandriz-divreiz-vairak-neka-sakotneji-planots
[12] IUB, procurement PSKUS 2024/37 — https://www.iub.gov.lv
[13] IUB, procurements PSKUS 2024/74, 2024/83, 2025/167 — https://www.iub.gov.lv
[14] CFLA, financial correction decisions — https://www.cfla.gov.lv
Legal instruments cited:
[15] Regulation (EU) No 1303/2013, Article 122(2) — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32013R1303
[16] Regulation (EU) 2021/1060 (Common Provisions Regulation), Article 136 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32021R1060
[17] Directive (EU) 2017/1371 (PIF Directive), Article 3 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017L1371
[18] Council Regulation (EU) 2017/1939 (EPPO Regulation), Article 26 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017R1939
[19] Treaty on the Functioning of the European Union, Article 310(5) — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12016E310
[20] Treaty on the Functioning of the European Union, Article 285 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:12016E285
Correspondence with EU and national institutions (on file with the author):
[21] European Anti-Fraud Office (OLAF), reply to Balticnews.com from Deputy Spokesperson Chris Jones, 22 June 2026.
[22] European Commission, Directorate-General for Communication, Spokesperson’s Service, reply to Balticnews.com regarding cohesion-policy oversight (background information; not for direct quotation or individual attribution, at the source’s request).
[23] European Court of Auditors, reply to Balticnews.com from Senior Communication Officer Claudia Spiti. See also the Court’s report on fraud affecting the EU budget: https://www.eca.europa.eu/lv/news/news-sr-2026-18 and the Commission’s cohesion-funds data portal: https://cohesiondata.ec.europa.eu/countries/21-27
[24] Tomáš Zdechovský, Member of the European Parliament (EPP), EPP Coordinator on the Committee on Budgetary Control (CONT), reply to Balticnews.com.
[25] European Public Prosecutor’s Office, reply to Balticnews.com from Press Officer Paula Telo Alves.
[26] European Parliament, reply to Balticnews.com from Jānis Krastiņš, Press Officer, Directorate for Media, Media Relations Unit. List of CONT Coordinators: https://www.europarl.europa.eu/cmsdata/292768/List%20of%20CONT%20Coordinators%20per%20Political%20Group.pdf
[27] Republic of Latvia, Ministry of Finance, reply to Balticnews.com prepared in cooperation with the Central Finance and Contracting Agency (CFLA) and the Audit Authority, signed by Elita Rubesa-Voravko, Deputy Director, Communications Department, 3 July 2026 (translated from Latvian).
[28] LA.LV, 5 March 2026 — A complaint has already been filed with the IUB over the open tender for the Pauls Stradiņš Clinical University Hospital’s A2 Building — https://www.la.lv/par-stradina-kliniskas-universitates-slimnicas-a2-korpusa-atklato-konkursu-jau-iesniegta-sudziba-iub
[29] Delfi.lv, Versijas — Jānis Ziņģis: “The Stradiņš Hospital A2 Building — we have finished almost everything, but the state has been on pause for two years” — https://www.delfi.lv/898102/versijas/120104348/janis-zingis-stradina-slimnicas-a2-korpuss-esam-pabeigusi-gandriz-visu-bet-valsts-divus-gadus-stav-uz-pauzes
