The Chesapeake & Potomac Telephone Co. of Washington has complained formally that the Treasury Department last month improperly awarded American Telephone & Telegraph Co. and a partner an $86 million contract to provide a 20,000-line in-house phone system for the department.

In a protest filed Monday with the General Services Administration's Board of Contract Appeals, C&P alleged that Treasury officials evaluated competing bids by unequal standards, and said that AT&T's system would not meet technical requirements set for the system.

"We believe that Treasury made an appropriate award to us and beyond that we're not prepared to comment," AT&T spokeswoman Edith Herman said yesterday.

AT&T's partner, the McLean-based telecommunications specialist Institutional Communications Co., declined comment, as did a Treasury spokesman.

C&P currently provides the service, which links 16 Treasury offices around the Washington area, and had sought a renewal.

But on Nov. 20, Treasury gave an eight-year contract to AT&T and Institutional Communications for a system that would bypass C&P's local network.

In its filing, C&P also said that AT&T had not filed necessary tariff applications with the D.C. Public Services Commission.

"We consider this a very serious matter," William Harral, a vice president at Bell Atlantic Corp., C&P's parent, said in a statement issued yesterday. "This procurement clearly demonstrates how a large integrated supplier such as AT&T can bypass the local network and do so without the required authority."

Bell Atlantic and the country's six other regional phone companies have been prohibited from engaging in manufacturing since their creation in 1984.

Harral said this restriction had put his company at a disadvantage in seeking contracts of this type.