Young-Min Yoon

A Tempe engineer is preparing to sue the Arizona Department of Transportation, alleging that the state improperly favored minorities when awarding contracts.

This isn't just any lawsuit, because Paul Braunstein, the engineer, isn't just any guy. He's already sued ADOT twice, alleging corruption. The first time, he settled for almost a million dollars. The second case is still pending, but it appears to be building steam in the court of public opinion, if not the actual courtroom, after recent media attention.

Just after New Times started asking questions about his second case, in May, an ADOT staffer who helped award contracts to his daughter's company unexpectedly left the agency (see "Friends at Work," June 1). And, after our story was published, the second ADOT employee at the center of Braunstein's allegations announced his retirement. (More on that news in a minute.)

Braunstein, a white man who owns a small company called BasePlans, filed a "notice of claim" May 26 with the Arizona Attorney General. The claim announced Braunstein's intent to challenge the legality of three multimillion-dollar design/management contracts that ADOT inked last year.

ADOT planned to use the contracts to fund Maricopa County freeway work for the entire span of Proposition 400 spending -- a full 20 years.

Here's the problem: In its January 2005 selection process, ADOT asked applicants to earmark at least 6 percent of the work for firms owned by women or minorities.

But a decision from the Ninth Circuit Court of Appeals, issued four months later, determined that similar set-asides used by the transportation department in Washington state were unconstitutional. After the U.S. Supreme Court declined to reexamine the case, the Federal Highway Administration announced that states were not to use set-asides unless certain conditions were met.

One condition? Agencies needed to study "past discrimination" locally, then limit set-asides to groups that actually suffered.

ADOT hasn't done that.

Other states, including California, have wrapped up their studies and chosen to switch to race-neutral measures.

But ADOT isn't that far along. The agency told the Arizona Republic earlier this year that it had halted its affirmative action program, but only temporarily. The governor's office is raising money to do a discrimination study -- but such a study, it has said, could take up to two years.

In the meantime, Braunstein says ADOT needs to throw out the contracts that used set-asides. The agency doesn't have the "narrow tailoring" that the court has mandated, he says, so the contracts are illegal.

ADOT made its selections before the appellate court ruling out of Washington state. But, in the murky world of constitutional law, that may not matter: School segregation, for example, may have predated civil rights law -- but was still illegal after the Supreme Court stepped in.

Braunstein also notes a history of court rulings against affirmative action, dating to 1995, that should have put ADOT on notice that its set-asides were illegal.

In his notice of claim, he vows to sue unless the agency cancels the contracts and pays him damages.

"It's clear these racial quotas violate what the Federal Highway Administration has said is legal," Braunstein told New Times in a phone interview last week. "And, in this case, they've been misused and abused. Why are they not canceling these contracts?"

At a minimum, the new suit is one more headache for an agency that's suffered quite a few. (Since taxpayers ultimately foot the bill, that $910,000 settlement with Braunstein better have been painful.)

But it could be even worse than that.

Here's why: Not only is Braunstein being represented by Suzanne Dallimore, a former assistant Arizona attorney general with a knack for complicated public corruption cases, but he's also brought in a guy who could prove even harder to dismiss. Gary Lofland is an attorney in Yakima, Washington -- and the guy responsible for handling the precedent in that state that's revamped federal rules.

Lofland didn't return calls for comment. Spokeswomen for both the Arizona Attorney General and ADOT declined comment, citing the ongoing litigation with Braunstein.

But there are signs that Braunstein's war with the agency may be notching some casualties.

Last month, the ADOT employee at the center of Braunstein's allegations, Jim Romero, unexpectedly left the agency. It is unclear whether he quit or was forced out, although his departure came less than a month after New Times requested his personnel file.

Although the agency refuses to turn over the file, it has confirmed his departure.

Then, on June 15, ADOT announced in an e-mail that a second employee was leaving the agency.

The e-mail, sent to a handful of ADOT employees, said that assistant state engineer Steven Jimenez was taking his "annual leave" and would be retiring in July.  

Jimenez, who will have completed 30 years of work with the department in July, had admitted in deposition that he took Suns tickets, Diamondbacks tickets, meals, and a pocketknife from contractors doing business with the state.

After Braunstein complained last year, ADOT's internal affairs department launched a cursory investigation. The department cleared Jimenez of any wrongdoing -- but, as Braunstein and his attorney learned in deposition, the agency's investigator never even bothered to tally the items Jimenez accepted, much less assess their value.

And, as records make clear, at least one of Jimenez's actions did benefit his benefactor: Around the time he's admitted to accepting gifts from the national design firm DMJM, Jimenez extended one of the company's multimillion-dollar contracts for five years longer than its original terms. No other firms were given a chance to compete.

ADOT spokeswoman Jodi Sorrell says that Jimenez's retirement plans have nothing to do with Braunstein's claims. It's not unusual, she says, for state employees to retire at the end of the state's fiscal year in June, and Jimenez certainly had the experience to justify retirement. Sorrell says he was not forced out.

Still, the rapid departure of the two employees named in Braunstein's suit, within a month of the first newspaper stories about the case, appears to be more than coincidental.

And perhaps the biggest sign that state officials are finally taking Braunstein's allegations seriously is a recent filing from the Arizona Attorney General.

The agency is tasked with investigating complicated white-collar crimes, including fraud. But the agency also represents ADOT -- creating a sticky situation when its client is accused of wrongdoing.

And so Attorney General Terry Goddard's office has spent the past three years defending ADOT.

It's Goddard's office that signed off on the $910,000 settlement last year. And it's Goddard's office that's argued that ADOT doesn't have to follow federal procurement rules or state procurement rules -- its staffers can do what they want.

On June 14, however, the attorney general filed paperwork with the court withdrawing as ADOT's attorney. The agency will now be represented by a small Phoenix firm, Curtis, Goodwin, Sullivan, Udall & Schwab.

Documents obtained by New Times suggest the attorney general may have been wise to step aside.

The documents include the score sheets completed by members of ADOT's selection committee. (The committee was choosing design/management firms for Maricopa County freeway work -- the contracts at the center of Braunstein's second suit as well as his upcoming notice of claim.)

Six firms applied for the work, and the selection panel was charged with winnowing the list to three firms. To that end, documents show, they considered both the main firms' capabilities and their roster of local subcontractors.

And that's where the problem comes in. James Romero, a longtime ADOT manager, was one of the eight panelists. And -- though there's no record of his disclosing it to the agency -- his daughter works for Aztec Engineering, which was listed as a subcontractor for three of the applicants.

Romero heavily favored the three firms using Aztec, according to records. On a 90-point scale, he scored those three firms 85, 83, and 82.

The three firms not using Aztec?

On that same 90-point scale, Romero gave them a 74, 60, and 58, records show.

In the first round of scoring, only one of the other eight panelists ranked all of Romero's favored three firms at the top. And no other panelist issued any score below 68.

After a round of interviews, the panelists revised their scores to reflect the new information they'd been given. And once again, Romero ranked the three firms using Aztec much higher than the others. Once again, his lowest score was a full 14 points lower than anyone else's.

Ultimately, the three firms that Romero favored were chosen by ADOT for millions of dollars of work.

New Times' calculations show that the same three firms would have won even without Romero's scores being included.

But it would have been a squeaker -- the third-place firm would have beaten the fourth, which ended up getting zero work, by just 1/10th of a point. And that's on a 100 point scale.

(There's also the question of what impact one person can have in an interview setting, where panelists interact with each other and can be influenced by each other's questions.)

But Braunstein has long alleged that the problems at ADOT go far beyond Jim Romero. And while the selection panel scores do raise questions, it's an e-mail exchange from the same period that seems to point to a bigger problem -- an agency that's unconcerned with the appearance of impropriety and, perhaps, impropriety itself.  

The e-mails, written in January 2005, are between one of the members of the selection panel and Carrie Satterlee, the contract manager supervising the process.

The panel was just beginning to evaluate the design firms' proposals when the panel member, Maria Deeb-Roberge, e-mailed Satterlee asking for advice.

One of the firms -- a company then vying for selection -- wanted to set up a job interview with her.

"[T]hey want to talk to me to see how someone with my experience and degrees can fit in with their firm," Deeb-Roberge wrote. She thought they didn't even know she was on the selection panel, but she couldn't be sure.

To Deeb-Roberge's credit, she appears to have immediately understood that the interview offer could easily be construed as a way to rig the selection. She didn't want to do anything that "may have the appearance of improper behavior," Deeb-Roberge wrote, and asked Satterlee if she should take herself off the panel.

One week later, Deeb-Roberge did in fact remove herself from the panel, and ADOT tossed out her scores.

But it was not because ADOT's contract manager -- the person charged with spending millions of dollars of taxpayer money -- saw anything wrong with what happened. According to the e-mails, it was because Maria Deeb-Roberge decided, on her own, that the whole thing smelled bad.

As her response to Deeb-Roberge's original e-mail makes clear, ADOT contract manager Carrie Satterlee thought that there was no problem if a firm trying to get state work wanted to hire someone on the selection panel.

In fact, amazingly, Satterlee dismissed Deeb-Roberge's concerns.

"I see no reason to disqualify yourself from panel participation," she wrote. "It appears they are only interested in hiring you."

Sponsor Content


All-access pass to top stories, events and offers around town.

Sign Up >

No Thanks!

Remind Me Later >