LIVERPOOL council has been found guilty of maladministration over the “unjust” awarding of a £750,000 contract to fit school playground equipment.

An investigation found that when the company the council selected went into administration, two of its directors set up another company – and were awarded the remaining £500,000 contract ahead of other bidders.

In a damning report, the local government watchdog said the tendering officers were “not experienced or properly trained”.

Astonishingly, he said none of the officers even understood what “going into administration” meant.

There was also “particular concern” raised over the findings of the council’s internal audit unit’s own probe that the process had been “transparent, fair and open”. The watchdog said that verdict was “incomprehensible”.

Despite rules that require three years’ worth of accounts to be produced, city bosses awarded the contract on the basis of just a month’s unaudited books.

The report “did not find anything to suggest that officers acted out of any improper motive or were in any way corrupt”, but said that “any reasonable person” would have thought that without being able to produce three years’ accounts, they would not be eligible to win the tender.

There was also found to be no evidence of officers checking whether the company had been through the right health and safety checks.

The firm – referred to as “New Company E” – also put the head of the tendering department as a reference. Yesterday, city leaders fumed that the situation was a “farce” and raised serious questions about the council’s ability to self-police.

The investigation, launched after a complaint from rival bidder “Mr L”, found: “The way the tenders . . . were assessed was not ‘fair, open and transparent’ and maladministration occurred because the criteria for assessment were not established in advance and the three officers used differing approaches with inconsistent results.

“The officers involved based much of their assessments of New Company E on their knowledge of the original Company E, when the companies were entirely different legal entities.”

It adds: “In light of the findings of my investigation, the conclusion communicated to Mr L that the tender process was a ‘fair, open and transparent process’ is incomprehensible and can only have further undermined his confidence in the council.”

Liberal group leader Cllr Steve Radford said: “It’s outrageous, it stinks. Here it seems we’ve literally just thrown a contract at a company, given it to someone who has blown it before.”