The Director is completely wrong here, and is making a serious error in judgment.
If 3
♠ is an improper bid by the tourney conditions, then E-W are the offending side and N-S are the non-offenders. There is no Lawful or earthly reason for N-S to be handed average minus for doing nothing wrong.
I fail to see how 3
♠ can be improper. It may not be a sound call, but it is certainly legal. Maybe if the partnership agreement is highly unusual (it shows a hand with five pairs and seven outside spots!?

) it may be deemed illegal because only a computer could understand it, but it certainly seems like a natural bid based on what followed.
Is it possible that East misclicked 3
♠ for 2
♠ and alerted the Director privately, and the Director decided that instead of 5
♥ down one, probably about 10% for N-S, E-W should get 50% less for causing the problem and N-S should get 30% more for being innocent?
Of course, this is not a Laws-approved decision by the Director. Even if 3
♠ is for some very strange reason outlawed, the correct ruling is to first attempt to work out a likely result, and if this is impossible, assign A+-, not A--.