MICHAEL Smallwood is the assistant in charge of shipping and packing paintings and sculpture and stuff for the National Museum of American Art, and the other day he found he was really enjoying his work: He was packing his own large oil, "Suma," for delivery to a buyer.

And the best part was, the buyer was the U.S. government.

In the midst of Reagan's Iron Age, Smallwood and another Washingtonian, Gayil Nalls, were winners of a GSA competition to provide art for the new Richard B. Russell building in Atlanta.

"They advertised throughout the South," he said, "and they got 2,000 artists and I don't know how many slides." The GSA tries to find artists who have some connection to the region involved. Smallwood's family comes from Baton Rouge, La., where he was raised, though Washington itself is considered southern enough in this case. Nalls is a native Washingtonian.

After several months the stack of slides was reduced to 18 artists and 60 works. Three major pieces by Sam Gilliam, Jenifer Bartlett and Lloyd Hamrol will grace the main access to the new building, and the other paintings and drawings will be scattered through the corridors and rooms.

Nalls got $950 for each of three encaustics on handmade paper. Smallwood got $2,200 for his oil painting, at 54x72 inches the largest piece chosen. The price is in line with his regular rates, he said, plus shipping costs.

The picture shows two huge equilateral triangles facing each other, point to point. It is possible to see in them the fierce bellies of two Sumo wrestlers confronting one another.

"I use a lot of layers," the artist said, "lots of calligraphic marks but no words, just lines and colors. I start from photos of shapes. Walls. Geometric patterns. Maybe my work has a lot to do with monuments, this being Washington. I use the camera as a sketchbook."

To him it seems recognition has been a long time coming, though in fact he only has been painting since he left the University of Maryland in 1976. Impatient with the idea of graduate school, he promptly headed out on his own, working in his tiny studio after hours and weekends. Trained as a printmaker, he learned to work in oils "sort of by Zen" by watching painter Jacob Kainen and graduated to canvas two years ago. Last fall his paintings were shown at the opening show of Addison-Ripley Gallery. Friends have tempted him with apartment offers in New York, but he rejects the New York mystique for artists.

"A lot of artists have been coming back from there," he observed. One of these is Gayil Nalls, who spent two years at the Parsons School of Design under Larry Rivers and Jane Wilson, but returned here to study at American, George Washington and the Corcoran before chucking the whole academic thing to work by herself. She does oils and acrylic.

"This was the first time the government bought anything of mine. I was kind of surprised," she said. "One of them shows a shape like the Washington Monument with something terrible happening to it. Then there's a Southern mansion on a hill with some calamity about to strike. And a Southern belle's dress with nobody in it. Very ominous."

Her work has won prizes at the Smallworks National in Rochester, N.Y., and the Delaware Biennial.

The GSA art and architecture program actually predates the WPA Depression art project, according to director Donald Thalacker, and is run on a specific site basis, supplying art by area artists for many new or renovated federal buildings. There have been ups and downs, notably a 1966 flap over a Robert Motherwell painting that briefly got the program suspended when some officials questioned its artistic value. But GSA handles an average 25 projects for $300,000 a year.

"We've spent as little as $26,000 and as much as $1.5 million, depending on the building activity and the enthusiasm of the top officials," he said.