The Maryland Board of Public Works reversed itself today and gave the state Transportation Department authority to negotiate a contract, valued at about $20 million, with the Ralph M. Parsons Co. to manage construction of the Baltimore subway system.

It was the board's refusal to approve such negotiation, first recommended by the transportation department last November, that led to the resignation in May of Transportation Secretary Harry R. Hughes. In his resignation statement, Hughes complained that Victor Frenkil, a politically influential Baltimore contractor had "tampered" with the selection process.

Hughes' successor Hermann K. Intemann, was told last month by Acting Gov. Blair Lee III to study the possibility of doing the management work with safe employees. But intemann reported today that he was 90 to 95 per cent convinced that "the state cannot do this in house."

The boards procedure for selecting major contractors was designed to eliminate corruption and diminish the influence of politics in the awarding of major contracts in a state that had been rocked with scandal in the handling of its major public works projects.

Frenkil's firm Baltimore Contractors, Inc., had been eliminated as a prime contractor in early consideration of applicants for the important job of supervising construction of the planned $721 million subway , the most expensive public works project in Maryland history. But Frankil's firm popped up later as a substantial subcontractor to one of the five firms selected as finalist in the selection process.

When that Frenkil combine was rated last among the five finalists, Frenkil reportedly contacted his friends, Gov. Marvin Mandel and Comptroller Louis L. Goldstein, who are two of the three members of the works board, and told them the state could save $5 million by awarding the contract to the consortium of which he then was a part.

The five-member Selection Board rated the Parsons Co. first among the five last September, and Hughes appeared before the works board in November recommending that Parsons be awarded the job.

The board delayed action until March, when it rejected the Parsons' bid. Between November and March, according to testimony of Parsons' officials at a legislative oversight hearing this summer, Frenkil told Parsons executives that if his firm were taken on a a subcontractor, he could assure that Parsons would be picked for the job.

It was in that context that Acting Gov. Lee last month pledged that no matter what course the state chose, Frenkil would not get a portion of the contract.

When Intemann appeared before the board today, he said he had been informed that Frenkil had withdrawn as a subcontractor for the fifth-rated consortium, opening the way for Intemann to tell the board that if he could not win agreement with Parsons, he would, in order, go to the second, third, fourth and finaly thr fifth-rated groups.

Intemann said he could not estimate the cost of the eight-month delay, either in dollars or time. He said it will be necessary for the state to hire 26 employees by the end of the month, and up to 42 in the fall, but that extra $300,000 or so in salaries might be offset by a corresponding reduction in the need to include these jobs in the contract with Parsons.

In a related action today, the works board awarded the third major construction contract on 8.3-mile subway, despite protests from black contrators that the winning bidder had failed to follow guidelines that call for minority firms to ge at least 10 per cent of all contracts.

The contract, for construction of the Lexington Market phase of the subway, went to a combine headed by Traylor Bros. of Evansville, Ind., on a low bid of $17.5 million.

Robert Fulton Dashiell, counsel for the Maryland Minority Contractors Association, complaine that Traylor Bros. "credibility is at issue" because of the disclosure last month that three of its proposed minority subcontractors had been hastily organized as front groups for white firms.

The front firms were disqualified last month by Walter Addision, administrator of the federal Department of Transportation's Mass Transit Administration, an action that the MTA said reduced Taylor's proposed minority participation from 16 per cent to 11 per cent. Dashiell disputed those figures today, saying the actual dollar value of work to be given minority firms under the Traylor proposal was 8 per cent.