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ADOT minority business program cleared in dispute

WASHINGTON — A federal appeals court ruled Wednesday that an Arizona Department of Transportation affirmative action program was not the reason a non-minority Tempe contractor could not get work with the state.

A three-judge panel of the 9th U.S. Circuit Court of Appeals instead upheld a lower court, which said Paul Braunstein did not get work simply because “those who were in a position to provide it did not want to do business” with him.

An attorney for the department said she was “pretty happy” with the ruling.

“It was a long fight and ADOT won at every step,” said Kelly Schwab, the attorney.

Braunstein said Wednesday that he was not ready to comment and neither of his attorneys could immediately be contacted.

The case centered on the department’s Disadvantaged Business Enterprise program, which Braunstein said kept him from competing for a 2005 contract because of its use of “race and gender preferences.”

It was the most recent in a series of legal challenges from Braunstein that began in 2003, when he accused the department and two companies of “secretly and improperly” conspiring to divert work to one of the firms.

Braunstein and his engineering firm, BasePlans, had previously done work for the department, which used to hire contractors directly for projects as needed.

In 2001, however, the department shifted to a system under which a project’s prime contractor sought and hired subcontractors.

Braunstein’s first suit, for breach of contract, was thrown out in 2004 by a state court that noted that the prime contractor never asked BasePlans to bid on work because it had problems with BasePlans on prior jobs.

When the state reopened bidding for a prime engineering and design contractor in 2004, it required that bidders abide by Disadvantaged Business Enterprise guidelines for minority participation. Braunstein contacted the six firms bidding on the contract, but never submitted a quote, and they all rebuffed his inquiries, according to court documents.

Braunstein sued again in state court in 2005, claiming conspiracy and antitrust violations, among other charges. The superior court dismissed his suit.

He brought suit in federal court in 2006, charging that the DBE program violated the Civil Rights Act and the 14th Amendment’s equal protection clause. The district court rejected most of the claims in 2007 and dismissed the rest in 2010, after determining that he had not shown that the “DBE program had affected him personally.”

“Braunstein was afforded the opportunity to bid on subcontracting work, and the DBE goal did not serve as a barrier to doing so, nor was it an impediment to his securing a subcontract,” the district court said. “Rather, he did not get any of the work because those who were in a position to provide it did not want to do business with Braunstein.”

The appeals court Wednesday agreed that Braunstein has “not provided any evidence that the department’s DBE program affected him personally or that it impeded his ability to work.”

But the appeals court overturned the lower court’s order that Braunstein’s attorneys pay the state’s attorney’s fees and pay sanctions for “unreasonably prolonging the proceedings.” It said the district court had not shown that all of Braunstein’s claims were frivolous.

A transportation department official welcomed the ruling and said the department would continue the DBE program.

“We’ve always had one, we’re going to always continue to have one,” said Timothy Tait, assistant communication director for the department. “It’s something we’re committed to.”