The University of Maryland is competing for a multimillion-dollar contract from the Department of Defense to establish the country's first software engineering institute, according to school officials.

The department is expected to announce this month its choice for the institute, which will be charged with applying the latest technology to software systems for the armed forces so it can be used to program ships, planes, satellites and other weaponry.

University of Maryland officials said they are hoping that their computer science department, which has won national honors, coupled with the proximity of the proposed site to Andrews Air Force Base and nearly 50 defense contractors in the region, will win the contract for them.

"The institute has the potential to become a magnet institute," said Robert G. Smith, the school's vice president who helped put together its proposal. "It will be one of a kind, a place where major industries will want to have offices and which will attract the kind of world-class people who are at the leading edge of the computer software engineering field."

The institute, which is expected to employ 250 people, is scheduled to open in this fiscal year with a $7.9 million budget, Smith said. The budget is scheduled to rise to nearly $33 million after five years, Smith said.

Others vying for the institute include:

*Carnegie-Mellon University in Pittsburgh.

*Georgia Institute of Technology.

*Northeastern University in Boston, which has as affiliates Brown and Harvard universities.

*Massachusetts Institute of Technology.

*Wang Institute.

*A consortium of schools that includes Texas A&M University, the University of Southern California, the University of Texas at Austin, the University of Southwestern Louisiana and Prairie View A&M University.

*Wright State University in Dayton, Ohio, which has as affiliates Ohio State University and the University of Dayton.

*The University of Michigan, leading the so-called Big 10-consortium that includes Purdue University and the University of Illinois.