The General Services Administration may seek legal action to retain space it leases from a local firm, even though the firm told GSA 16 months ago the lease would not be renewed when it expires Aug. 31.

The firm, BNA Washington Inc., has accused GSA of dragging its feet in trying to find alternative space.

BNA manages real estate holdings of its parent firm, the Bureau of National Affairs Inc., a publisher of business and professional information which had revenues of about $60 million last year.

The disputed space - 25,000 square feet on two floors of one of BNA's six-story buildings on 25th Street NW - now houses the administrative law judges of the National Labor Relations Board.

BNA President Steve Lane said BNA "desperately" needs the space for its own expanding operations.

"If I don't get those two floors back by Sept. 1, it will cost me $750,000 to $5 million to get the space that we need," Lane said, that he would have to move 70 to 80 low-salary jobs now filed by D.C. residents to his plant in Shady Grove. "How these people are going to get to work, we have no idea," Lane added.

Foreseeing BNA's needs for space, Lane wrote the GSA on Feb. 15, 1977, stating that the lease would not be renewed.

Having received no response and "smelling a rat," Lane wrote again on April 26 of this year, explaining that BNA's needs made any extension of the lease "impossible."

Edward Kidwell, GSA's region three director of space management, responded to Lane on May 17, stating "written assurance of vacancy upon lease termination cannot be provided at this date" because GSA had been unable to find other suitable space. Kidwell said he did not respond to Lane's first letter because "it didn't require a response."

On June 8, GSA wrote Lane that, if suitable space could not be found by June 21, GSA would have "no choice but to request condemnation of appropriate space by the Department of Justice." Kidwell said yesterday that GSA has not begun any condemnation proceedings.

The government's power of eminent domain permits it to take private property, subject to court approval and in exchange for just compensation to the owner.

Lane claims that government exercise of this right in peacetime is "very, very rare" Kidwell said, "It's not a common practice. I can't think of more than several incidents since my association with this agency. It only occurs when there is no alternative."

Lane claims GSA was deliquent in beginning its search for alternative space. GSA first advertised for space last February, Kidwell said. "I think we pursued a prudent course of action," he added.

GSA did not begin its search sooner because the lease does not expire until Aug. 31, Kidwell said. BNA offered to let GSA buy out of the lease early by paying some compensation for BNA's lost rent revenue. Kidwell said buying out would have been costly to GSA.

"If after a year and a half, they can't find 25,000 square feet of office space, then something's wrong," Lane said, adding that a real estate company told him 785,000 square feet of office space has come on the market in the District since Jan. 1.

Asked about Lane's problems, Kidwell said, "I can't answer for his business. I can't give him alternatives. I'd like to get out as much as he wants, but I have to have a place to go."

"All we want is to have our building back," Lane said.