A federal grand jury is investigating a $360,000 consulting contract that was administered by the Metro workers' compensation office, Metro General Manager Richard S. Page said yesterday.

The investigation involves a contract with a Washington firm, New Horizons Consulting Agency Inc., hired in 1979 to find jobs for Metro employes who left their positions after claims of work-related injuries, according to Page.

In mid-1981, Page said, Metro suspended payments on the contract. An in-house investigation by Metro police and accountants concluded that "the organization New Horizons might not be doing what it claimed to be doing," Page said.

Yesterday, James D. Loesch, Metro's claims director while the contract was in force, and New Horizons' legal counsel, Thomas C. Brickle, said they knew of no wrongdoing.

Loesch, who resigned from Metro in December 1981 and now is a section chief in the D.C. office of workers' compensation, said that the contract had saved Metro nearly $1 million per year.

Page would not give details of what Metro's investigation had found. But he said that "we found sufficient information to justify turning what we knew over to the U.S. attorney."

Asked yesterday if federal prosecutors had received a referral, a spokesman for the U.S. attorney's office declined comment, as is customary in such cases.

Brickle said that New Horizons' president, Lester Stone, whom he described as the company's only full-time executive at present, is cooperating with the grand jury investigation. Brickle said he could not comment further, due to grand jury rules.

According to Page, Loesch signed the contract with New Horizons in December 1979. New Horizons agreed to find outside employment for Metro employes who had filed compensation claims. If employes take new jobs or are shown to have turned down employment, Metro legally can reduce its own payments to them.

Loesch was not a designated contracting officer and had no authority to sign such a document, Page said. It did not go through the Metro board or the general manager's office, Page said, as is customary with contracts of that size, and Metro's finance chief William Boleyn did not know of the contract until mid-1981.

While the contract remained in force, New Horizons collected approximately $360,000 from Metro, after submitting bills for services to specific employes, according to Page. Page said the company claims that it is owed an additional $180,000.

Page said many or all of the checks paid to New Horizons were for amounts of less than $10,000, which under Metro's accounting procedures do not need to pass through the general manager or the finance chief.

Page said it was not clear why Metro's accounting office had paid out any money for the contract, which he maintains was unauthorized. He said that since the contract was suspended, Metro has attempted to tighten procedures to assure that payments are made only on properly documented contracts.

Loesch said yesterday that he repeatedly had reached informal agreements for the services of outside lawyers, assessors and investigators during his time as Metro's claims director and that senior officials at Metro never had objected.

Loesch said the agreement with New Horizons called for the firm to be guaranteed $5,000 per month. In addition, the firm was paid part of the savings realized for each employe placed, generally collecting between $1,200 and $1,500, he said.

Loesch said he believes the contract fees were fair because, by his estimate, New Horizons saved Metro close to $1 million per year in claims payments. New Horizons found jobs for hundreds of people, he said, in such fields as private security and telephone solicitation.

Page's statements on the investigation were in response to specific questions from a reporter. The disclosure comes as Metro is attempting to Jury Probing $360,000 Metro Consulting Contract By John Burgess Washington Post Staff Writer

A federal grand jury is investigating a $360,000 consulting contract that was administered by the Metro workers' compensation office, Metro General Manager Richard S. Page said yesterday.

The investigation involves a contract with a Washington firm, New Horizons Consulting Agency Inc., hired in 1979 to find jobs for Metro employes who left their positions after claims of work-related injuries, according to Page.

In mid-1981, Page said, Metro suspended payments on the contract. An in-house investigation by Metro police and accountants concluded that "the organization New Horizons might not be doing what it claimed to be doing," Page said.

Yesterday, James D. Loesch, Metro's claims director while the contract was in force, and New Horizons' legal counsel, Thomas C. Brickle, said they knew of no wrongdoing.

Loesch, who resigned from Metro in December 1981 and now is a section chief in the D.C. office of workers' compensation, said that the contract had saved Metro nearly $1 million per year.

Page would not give details of what Metro's investigation had found. But he said that "we found sufficient information to justify turning what we knew over to the U.S. attorney."

Asked yesterday if federal prosecutors had received a referral, a spokesman for the U.S. attorney's office declined comment, as is customary in such cases.

Brickle said that New Horizons' president, Lester Stone, whom he described as the company's only full-time executive at present, is cooperating with the grand jury investigation. Brickle said he could not comment further, due to grand jury rules.

According to Page, Loesch signed the contract with New Horizons in December 1979. New Horizons agreed to find outside employment for Metro employes who had filed compensation claims. If employes take new jobs or are shown to have turned down employment, Metro legally can reduce its own payments to them.

Loesch was not a designated contracting officer and had no authority to sign such a document, Page said. It did not go through the Metro board or the general manager's office, Page said, as is customary with contracts of that size, and Metro's finance chief William Boleyn did not know of the contract until mid-1981.

While the contract remained in force, New Horizons collected approximately $360,000 from Metro, after submitting bills for services to specific employes, according to Page. Page said the company claims that it is owed an additional $180,000.

Page said many or all of the checks paid to New Horizons were for amounts of less than $10,000, which under Metro's accounting procedures do not need to pass through the general manager or the finance chief.

Page said it was not clear why Metro's accounting office had paid out any money for the contract, which he maintains was unauthorized. He said that since the contract was suspended, Metro has attempted to tighten procedures to assure that payments are made only on properly documented contracts.

Loesch said yesterday that he repeatedly had reached informal agreements for the services of outside lawyers, assessors and investigators during his time as Metro's claims director and that senior officials at Metro never had objected.

Loesch said the agreement with New Horizons called for the firm to be guaranteed $5,000 per month. In addition, the firm was paid part of the savings realized for each employe placed, generally collecting between $1,200 and $1,500, he said.

Loesch said he believes the contract fees were fair because, by his estimate, New Horizons saved Metro close to $1 million per year in claims payments. New Horizons found jobs for hundreds of people, he said, in such fields as private security and telephone solicitation.

Page's statements on the investigation were in response to specific questions from a reporter. The disclosure comes as Metro is attempting to control rising workers' compensation costs. This fiscal year Metro has budgeted $11.8 million for claims and their administrative costs. Metro, which employs approximately 7,000 people, expects about 2,900 compensation claims will be filed this year.

Metro is reorganizing its claims office and advertising for an outside management firm to introduce computers and other modern accounting systems, Page said. The contract will be worth about $200,000, according to Metro officials.

Page said the planned new contract is not a result of the investigation, but is part of long-range attempts to modernize the claims office.

Earlier this year, Joseph Welsch, inspector general of the U.S. Department of Transportation, released a report concluding that Metro's accounting standards were loose. The study did not examine the claims office. Since that report was released, Metro has tightened accounting practices and established an independent auditing office. control rising workers' compensation costs. This fiscal year Metro has budgeted $11.8 million for claims and their administrative costs. Metro, which employs approximately 7,000 people, expects about 2,900 compensation claims will be filed this year.

Metro is reorganizing its claims office and advertising for an outside management firm to introduce computers and other modern accounting systems, Page said. The contract will be worth about $200,000, according to Metro officials.

Page said the planned new contract is not a result of the investigation, but is part of long-range attempts to modernize the claims office.

Earlier this year, Joseph Welsch, inspector general of the U.S. Department of Transportation, released a report concluding that Metro's accounting standards were loose. The study did not examine the claims office. Since that report was released, Metro has tightened accounting practices and established an independent auditing office.