Gaines V. Palmes, 85, a retired attorney who specialized in government contracts while working for the Justice Department and later in private practice, died Friday at the Manor Care nursing home in Arlington. He moved to Manor Care about four years ago because of Parkinson's disease. The immediate cause of his death was a heart attack.

Mr. Palmes was born in Mobile, Ala. He became a civilian employe of the Army Corps of Engineers in the South in 1918 and stayed with the organization until the mid-1920s. He then operated movie theaters in Mobile, Ala., and Huntington, W. Va. In 1929, with the onset of the Depression, he turned to the Corps of Engineers and became a purchasing officer in Vicksburg, Miss. In 1934, he was transferred to Washington.

While still working for the Corps of Engineers, Mr. Palmes earned a law degree at the National Law School. In 1938, the year he finished law school, he joined the Justice Department's civil division and specialized in contracts. He stayed at Justice until his retirement in 1953.

He then entered private practice in Washington and continued his specialty of government contracts. At one time he was a partner in the firm of Rhodes, Simms, & Palmes. Mr. Palmes retired a second time about 1972.

He was a member of the Church of the Epiphany in Washington. He also was a member of the D.C., American, Mississippi and Federal bar associations.

Survivors include his wife, Florence E., of the home in Arlington; a daughter, Gayle, of Monterrey, Calif.; three sons, Dr. Gaines K., of Arlington, Douglas E., of Spanish Fort, Ala,, and Lowell R., of Falls Church; six grandchildren, and six great-grandchildren.