WASHINGTON — Eric W. Payne’s world has shrunk. The man who oversaw millions of dollars in city contracts today watches every dime in his family budget. He has not worked full time since 2009. He and his family were evicted last summer, and now their lives spill from boxes in a cramped town house in suburban Virginia.

But this is not a typical hard-luck story of setback amid a recession.

Since he was fired almost four years ago, Mr. Payne, 41, has been locked in a bitter dispute with the city’s chief financial officer, Natwar M. Gandhi, his former boss and one of the most powerful unelected officials in Washington. Mr. Payne asserted in a lawsuit filed in 2010 that he was fired for drawing attention to misconduct in city contracting; Mr. Gandhi has countered by calling him a disgruntled employee.

At least one federal criminal investigation has sprung directly from concerns that Mr. Payne says he raised when he was a contracting officer and included in a lawsuit over his dismissal. The Securities and Exchange Commission is investigating Mr. Gandhi’s office as well.

The legal feud has taken an unusually personal tone. In a second lawsuit, Mr. Payne accused Mr. Gandhi of defaming him in public statements and in private e-mail circulated to business leaders, preventing him from finding new work.