UDOT fired Graham in April 2011, accusing her of leaking confidential information about the $1.1 billion contract to rebuild Interstate 15 through Utah County.
Graham denied providing any confidential information and appealed her termination. Last month, the Career Service Review Office ruled the firing was "clearly not supported" and ordered her reinstatement.
UDOT said at the time they were exploring an appeal but opted against it, said UDOT spokesman Nile Easton.
"We met with our attorneys and it sounded like it was really 50-50 whether we were going to win" an appeal, Easton said. "We believe the hearing officer didn't understand what she'd done, and we don't feel it was fully explained properly. But, at this point, we felt like it was just time to move on. For us, for Denice, for taxpayers, it's better to just move on."
Easton said she will return to the position of civil rights manager with her previous salary and expects her to be welcomed back.
"For the team she works with, everybody's busy. We all have day jobs that keep us busy. I don't think they're even thinking about it," he said. "I don't foresee any kind of weirdness, at least on our UDOT employees' part."
Graham's firing and reinstatement followed the mishandled, billion-dollar contract, which saw a quiet $13 million settlement with a bidder and revelations of improper relationships between another contractor and a UDOT employee.
Her replacement, Debra Charleston, was also fired by UDOT, in January.
A former director of black affairs for the state, Charleston suggested her dismissal was racially motivated. She said her supervisor was disappointed that she was organizing a Martin Luther King Jr. Human Rights Commission luncheon featuring U.S. Attorney General Eric Holder.
As for Graham, she said that the investigation, firing and year out of work have been grueling.
"It's been a living hell," she said. "It has taken a toll on me emotionally and physically and I literally almost had a stroke, and I'm under a doctor's care right now and have been over the last year for the physical toll that the stress was taking on me."
She said she slept little during the year and her husband bought only food and "bare necessities," skipping birthdays and Christmas. They sold possessions and borrowed money from family members.
"Even after winning I still haven't won because I'm still left with the financial burden," she said, "and that's heart wrenching to know that you win but you really don't win," she said.
Graham said UDOT has made no offers for back pay. Easton said the order from the Career Service Review Office required only her reinstatement.
In late 2009, Graham, who was part of the team reviewing bids for the I-15 project, was asked by an officer from Wadsworth Brothers Construction, part of the team bidding on the project, whether another team, Flatiron Construction, had won the contract.
Graham accessed an website that showed Flatiron at the top of a list, but the ranking was irrelevant to the contract scoring.
It turned out that Provo River Constructors, which included Wadsworth Brothers, won the contract. But irregularities prompted UDOT to pay Flatiron $13 million to settle complaints about the bid.
Graham wasn't fired until a year later, after the settlement was revealed during Gov. Gary Herbert's gubernatorial bid. Herbert's campaign had accepted some $87,500 from Provo River Constructors members.