A private research facility run by a member of the National Cancer Institute's advisory board has received ever-larger contracts from the institute despite severe critism of its work by outside reviewers, according to General Accounting Office investigators.

The facility is also affiliated with an industrial research unit that has performed work on chemicals for major purchased materials without reimbursemnt, the GAO investigators said.

What the congressional investigators described as the apperance of a potential conflict of interest has prompted Rep. David R. Obey (D-Wis.) to ask GAO for a full report on the Cancer Institute's contract, with an eye to its overall administration.

"If what the General Accounting Office has apparently found in reviewing the Eppley Institute contract is an indication of how other contracts and research efforts . . . have been administered, I think Congress has no choice but to consider a complete overhaul" of the Cancer Institute, said Obey, a member of the Labor-Health, Education and Welfare Subcommittee. The Cancer Institute is part of the National Institutes of Health under HEW.

The Eppley Institute at the University of Nebraska in Omaha is rub by Dr. Phillippe Shubik and has received $24 million in Cancer Institute contracts since 1969, according to Obey's office; this year it is receiving $3 million, primarily for work on environmental causes of cancer.

Shubik was appointed to the National Cancer Institute's advisory board on Aug. 17, 1973. Until last month he was also chairman of the advisory board's subcommittee on environmental cancer, therefore, GAO said, Shubik was "the member of the board most directly responsible for overseeing the operations of the division of the Cancer Institute which awards and administers the Eppley contract.'

The 18-member presidentially appointed advisory board oversees ghe operation of the Cancer Institute and its "war on cancer." Shubik's current term is to expire in 1982.

Efforts to reach Shubik were unsuccessful, but National Cancer Institute spokesmen defended the Eppley contract and the agency's own monitoring of it, which Obey said GAO found to be lax or nonexistent. According to Obey, GAO investigators found:

At no time since 1973, the year of Shubik's appointment to the advisory board, has an Eppley contract been awarded consistent with agency guidelines or standards.Gary Flamm, assistant director of NCI's division of cancer cause and prevention, said officials fashion precedures ot meet the individual needs of large contracts, like Eppley's, and that new procedures call for a number of review committees ot evaluate contracts.

Eppley contracts increased despite strongly negative evaluations by outside reviewers. Flamm said, "All such criticism is taken under very careful consideration and advisement."

On review obtained by The Washington Post said, "I have no detailed comments to make about any of these studies since previous experience has shown that criticisms and suggestions recorded by reviewers of this contract are uniformly ignored. It therefore seems a waste of time." another review noted, however, an impressive and determined approach to an Eppley study of whether certain drugs can cause cancer.

Approximately 50,000 test animals, valued at $85,500 and bred under government contract, are unaccounted for. GAO said the Eppley Institute contends the animals were destroyed.

The Eppley institute is, according to Obey's announcement, "closely affiliated with an industrial research facility that performs research on industrial chemicals for large U.S. corporations at the same time the institute performs research for the government on such chemicals." Flamm says that private work is carried out on a different building and that the institute has "no exclusive rights to any contractor . . . there is nothing,. I'm sure, that precludes (the contractors) from accepting money from industry."

Obey said he felt the Cancer Institute was already taking steps to overcome problems found by the GAO investigators. He said, however, that in the coming weeks he would request GAO audits of at least two more contractors.