C3 Inc. of Reston reported a 35 percent decrease in profits for its second quarter ended Sept. 30 to $1.3 million (13 cents a share) from $2 million (22 cents) in the same period of last year, and attributed the decline to "lower gross margins on several government contracts" and the late start-up of shipments under two major contracts.

C3, which designs and makes computer systems primarily for the federal government, said revenue increased to $18.3 million from $16.5 million the year before.

First-half net income declined 37 percent to $2.7 million (28 cents) on sales of $33.7 million, compared with earnings of $4.3 million (48 cents) on sales of $33.1 million the previous year.

*W. Bell & Co. Inc. said yesterday that increased sales, reduced interest expense and cost control programs were responsible for a 59 percent increase in income for the first quarter of its fiscal year.

Earnings rose to $145,000 (5 cents a share) in the three months ended Sept. 29 from $91,200 (4 cents) in the same quarter of 1983.

The Rockville-based company, which operates 18 catalogue showrooms, said that sales increased to $27.2 million from $24.7 million a year ago.

*USF&G Corp., a Baltimore insurance company, blamed high underwriting losses for a third-quarter net loss of $15 million (27 cents a share) compared with profits of $46 million (80 cents) the year before.

The company said its revenue increased to $739 million this year from $582.4 million in the third quarter of last year.

Nine-month profits declined 83 percent to $27.4 million (51 cents) from $157.4 million ($2.73) in 1983. The per-share figures have been restated to show the effect of a two-for-one stock split in June.

*Radiation Systems Inc. reported first-quarter earnings of $970,000 (22 cents a share), up 11 percent from $872,000 (19 cents) in the same quarter of 1983.

Sales rose to $7.2 million from $5.6 million the year before, said the Sterling-based company, which designs and makes antenna products.

*TransTechnology Corp. said that earnings for its second quarter ended Sept. 30 increased 71 percent to $1.4 million (28 cents a share) from $818,000 (16 cents) in the same quarter of last year.

The Alexandria manufacturer of aerospace and other industrial products reported sales of $25.9 million compared with $20.3 million the year before.

First-half net income rose 10 percent to $2.3 million (47 cents) from $2.1 million (42 cents) in the first half of last year, while revenue increased to $47.3 million from $42.1 million.

*Greater Washington Investors Inc., a Chevy Chase venture capital investment firm, said its net asset value increased to $24.6 million ($8.36 a share) in the third quarter from $14.5 million ($8.05) in the same quarter of 1983. However, the third-quarter net asset value represents a 2 percent decline from $25 million ($8.49) in the last quarter of 1983.