To take a not-entirely-hypothetical example: what if someone won a Loeb award for a piece which rehashed a much more original work in the same publication, dated a couple of months earlier? That would be bad. But this would be worse: if the rehashed piece was deliberately excluded from the list of finalists for obvious reasons, and then reinstated by the final judges, just because they had no idea why it wasn’t included.
The problem, in general, is a lack of communication between the first-round and second-round judges. The final-round judges should be much closer to the initial-round judges, going back and forth, asking them why this made it through and that didn’t. The final decision can remain where it is, but it should be much more informed by the people who picked the finalists than it is right now. Because if the second-round judges don’t talk to the first-round judges, the first-round judges are likely to feel rather disgruntled. Especially if the winner was never on the original list of finalists, or if there’s no winner at all.