An article in Tuesday's editions incorrectly named a private firm that contracted with the D.C. Department of Environmental Services to prepare water and sewer bills for city customers. The correct name is Optimum Systems Inc.

The District government has hired a Dallas-based firm to run the city's trouble-plagued water and sewer billing system, officials said yesterday.

William E. Johnson, acting director of the Department of Environmental Services, said the firm -- Optimum Services, Inc. -- will be paid $243,000 over the next 10 months to compute bills for D.C. water and sewer users.

The bills will be tabulated and written at the firm's computer center in nearby Rockville, Johnson said, and then brought to the District to be stuffed into envelopes and mailed out by city workers.

The city's decision to seek outside help in preparing the bills follows years, of bookkeeping chaos within the environmental service department. Hundreds of residents received bills for incorrect amounts. Hundreds more received long-delayed bills for inflated amounts -- sometimes more than $1,000 each -- to cover accumulated water and sewer consumption.

The city announced last spring that it planned to bring all bills current and to begin collecting some $12 million in delinquent water and sewer charges. aFor the first time in several years, the city also began shutting off water service to customers who refused to pay. About 1,300 customers had service interruptions, officials said.

Johnson said that the bills are now current "for the first time in three years," and added that nearly half the delinquent accounts have been collected. yThe current problem, he said, is with the city's computer system.

Johnson said the main computer network is so overloaded and so frequently out of service that it threatens to disrupt the progress already made in bringing the water and sewer bills up to date.

"The system could not give us the attention we need to keep on schedule," Johnson said. "We've got to keep the billings current so that we can have some credibility."

Johnson said that, for example, customers who had questions about their accounts often were kept waiting for as long as 30 minutes while the severely taxed city computer -- called SHARE -- tended to other chores. In addition, he said, the system often goes out of service, forcing lengthy delays.

The contact with Optimum Services, Johnson said, provides that the company's computer must be fully operational 97 percent of the time. If it is not, the contract stipulates, the company must pay damages to the city.

The contract started last week, Johnson said, and billing information in the city's computer is now being transferred to the private firm's computer. "If this works, we'll probably look toward an extension" of the contract, he said.