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.