It sounds like the tenderers didn't understand public procurement. It's not that it is illegal to negotiate. It would illegal and unfair to negotiate with one party. If they were to negotiate with one supplier, they have to give all suppliers a chance to restate their prices, to ensure a fair, open and transparent process. If the Irish company were willing to negotiate down, then there is no reason to expect that the UK company will also negotiate down.
Some procurement exercises will involve choosing a 'preferred bidder' and then entering negotiations with that bidder. In the absence of this process, the bidders should have quoted their best and final price up front, not held something back for negotiation.
I agree with the core point about hypocrisy, mind you.