The American Medical Association today unveils its new $1.25 million art collection--the most expensive corporate collection ever formed in Washington. It includes major work by such contemporary American artists as Louise Nevelson and Al Held, as well as important examples by a number of Washington artists.

Seventy works by contemporary Americans have been purchased for the plaza, lobby and the AMA's new Washington offices, which will occupy the top two floors of its new 12-story building at 1101 Vermont Ave. NW. The architect was Vlastimil Koubek of Washington. The amount spent on art is extraordinary in that it equals more than 10 percent of the cost of the $12 million structure. The more-typical corporate art budget--when there is one--is 1 percent or less.

More than half of the art budget went for two works by Nevelson, who at 82 is the grande dame of American sculpture. They are her first commissioned works in Washington, and her first permanent public installations here. A $250,000 black wood-relief sculpture, as yet unnamed, has already been installed in the lobby and will be unveiled at 6 this evening, when the artist is scheduled to be present. A $390,000 Nevelson bronze has also been commissioned to stand on the plaza at the corner of Vermont Avenue and L Street, and is expected to be completed by fall.

Inside, paintings, sculpture, large drawings and photographs dot the walls in halls and offices. In the posh 12th-floor reception area hangs the collection's most important painting: a large, Abstract Expressionist canvas made in 1956 by Held--very different from the spare, geometrical work he does today. A recent bronze casting of a 1947 abstract wood carving by Louise Bourgeois, now 70, stands nearby.

Although most of the art comes from New York, a number of pieces by Washington artists have also been acquired, though not those usually represented in corporate collections. Among them are Washington painters Alan Feltus, Stephen Ludlum, Kevin MacDonald, Joseph White, Martin Puryear and William Christenberry. From New York, works by Jane Freilicher, Chuck Close, Michael Mazur, Gregory Amenoff, Jackie Ferrara and Yvonne Jacquette (also commissioned to do an airplane view of Washington) suggest the daring span of the collection. Photographs by Ansel Adams and Harry Callahan from the 1940s, as well as images by Emmett Gowin, Robert Rauschenberg and William Eggleston are also included.

"We wanted works of art that gave a broad view of recent American art, and we wanted the best examples," said James P. Byrd III, who assembled the collection with his associate, former critic Ian Dunlop. Before starting their own fine arts management firm in New York, both were associated with Sotheby Parke Bernet. For this assignment, their budget was five times that spent by Arnold & Porter, the Washington law firm whose corporate collection was inaugurated here last year.

"The broad scope of this collection was only possible because of the willingness of AMA to give us a free hand to curate the collection," said Byrd, who also had a free hand in the installation. The works were hung yesterday in various offices, the occupants of which were not consulted. The AMA's Washington staff of 40 was also told not to bring any additional art from home.