American Telephone & Telegraph Co. has established a subsidiary for centralized for procurement of all telecommunications products of all telecommunications products and supplies from non-Bell System manufacturers.

AT&T was responding to a decision by the Federal Communications Commission, which suggested a new procedure under which AT&T operating companies would have the autonomy to buy non-Bell equipment as well as products made by Bell's Western Electric Co. subsidiary. AT&T said the new company would be headed bu a separate chief executive.

The new subsidiary will provide technical and economic evaluations of non-Bell equipment for such AT&T subsidiaries as the Chesapeak & Potomac telephone companies in metropolitan Washington, make purchasing arrangements, and perform inspection and quality surveillance, AT&T said. Most of these tasks have been performed by Wester Electric.

At the same time, AT&T executive vice president Thomas E. Bolger forecast that Western Electric will continue as the dominant supplier of telephone equipment purchasers last year, $1 billion was from non-Bell firms.

"Western's cost performance, plus the high quality of its products, have been prime factors in meeting our goal of providing the best possible service at the lowest possible cost," he told the FCC in seeking the agency's concurence for operation of the subsidiary.

He said the new firm would have an initial staff of about 1,300 and would be in business within a year or two after FCC action.

In another development yesterday, AT&T's New England Telephone & Co. was authorized a $20 million annual rate increase in Massachusetts. The firm had asked for a $200 million boost in 1974, but was granted $93.5 million. This decision was appealed in the courts, which added $60 million and told the public service commission to consider an additional $20 million for a total $173.5 million now approved.