A 1975 grand jury probe into the way Montgomery County officials handled county contracts produced evidence of favoritism in the awarding of contracts, conflicts of interest on the part of some county employees, and instances where money "changed hands" between county officials and contracts doing business with the county, a former deputy state's attorney has testified.

The employes involved were never prosecuted, said Darrel Longest, the deputy state's attorney overseeing the probe, mainly because of the state's statute of limitations on misdemeanors, which was the one year, and the need to grant immunity to some otherwise vulnerable persons in return for their testimony about others.

Longest said the probe also revealed that county constructing projects and other capital improvment projects over the past 15 or 20 years "had resulted in vast cost overruns that were intentionally ignored by persons responsible for the maintenance or progress" of the contracts.

Longest, now an attorney in private practice, was subpoened to testify at a personnel hearing on behalf of the investigation, Athlyn B. Waller, Waller who went to the Montgomery County States' attorney's office with charges of contract iregularities the day he was demoted from his job as a division chief of the county's, office of facilities management in April 1975 and was subsequently fired, has appealed his case to the county Personnel Board.

His charges of irregularities in the handling of six county contracts sparked a one-monthly investigation by the states attorney's office. That investigation produced many headlines by never ruslted in the indictment of any county employes. Longest's sworn testimony before the Personnel Board marked the first time any of the officials who carried out the probe confirmed publicly that it had turned up evidence of criminal activity.

Longest said that the probe also revealed that the county had chaotic record-keeping practices, that it bungled and mismanaged the execution of many of its contracts, and that it made little effort to keep track of whether it got the goods and services that it paid for.

State's Attorney Andrew Sonner, who started the investigation, confirmed Longest's recounting of events. Sonner said that he had not made the information public before because he felt "our responsibility was basically either to indict or shut up and not to try the case in the press." Longest, he noted, was under subpoena to testify in the recent hearing.

Most county officials contacted by the Washington Post would not comment on Longest's statements. But Assistant County Attorney Dan Cassidy, one of the attorneys representing the county at the hearing, criticized Longest for "giving allegations of criminal misconduct without naming names and giving underlying facts."

Among the irregularities that Longest said his probe uncovered was the county's payment of between $118,000 and $122,000 to the owners of the Rockville Mall for office rentals before the county even occupied its offices there. The record-keeping on the payment was so confused, he said, that "we were never able to determine who specifically authorized those payments." "And that," he said, "killed the possibility of presenting any criminal responsibility.

A renovation of the heating and ventilation system on the sixth floor of the county office building was bungled, Longest said, and the engineer wo designed the system was paid an additional fee to "redesign the system that had been defective in design in the first instance." Longest said he tried to find out who authorized the second payment, but onec again was unable to do so.

Longest said his investigation revealed "some substantial conflicts of interest" involving the building of the county's Public Service Training Academy but that he could not reveal more details because the information came up during grand jury testimony.

Specific problems with the academy that he turned up on his own, though, included on a site with so much rock that it cost the county $150,000 simply to remove the rock. The county's records did not reveal who authorized the specific site, though, he said, so "once again I was stymied . . ."