District government agencies paid about $1 million more during the past fiscal year to have work done by the city's print shop than it would have cost to have private firms do the printing, a city official said yesterday.

Jose Gutierrez, director of the D.C. Department of Administrative Services, told a City Council committee that the city's high printing costs are attributable to personnel costs for the city's 49 print shop employes and printing equipment that is "sometimes 20 and 25 years old."

"Government employes are tenured. Their benefits are going up . . . . We cannot be competitive with the private market," said Gutierrez, who inherited the print shop when he took over the newly formed administrative services department last year.

Gutierrez said in an interview that city agencies increasingly are hiring private companies to do their printing. "I'm losing my clients," he said.

Gutierrez said that in an attempt to halt the loss of business, he has reduced the city print shop's fees so that they are now about 25 percent higher than those charged by private firms.

"Some agencies are arguing that I am still charging too much," Gutierrez said. "My response is that I am charging less than I was before."

However, Gutierrez said, even with his efforts to bring in more business, the print shop will continue to run a deficit and will have to be subsidized by the city.

Under the present system, city agencies pay Gutierrez's department for printing that they commission, and those funds are used to help defray the shop's cost. For example, Gutierrez said, during the 1984 fiscal year the print shop charged city agencies about $2 million for printing, or about $1 million more than it would have cost to have the same work done by private printers.

Even then, the print shop ended up about $1.2 million in the red because it cost about $3.2 million to run the operation during fiscal 1984. Gutierrez said he plans to make up the difference with a request for supplemental funds in the current fiscal year's budget.

"Why do we still have a print shop?" asked City Council member William R. Spaulding (D-Ward 5), chairman of the Government Operations Committee.

Gutierrez responded that abolishing the print shop would mean that nearly 50 employes would lose their jobs, which would be inconsistent with Mayor Marion Barry's policy against laying off city workers.

Gutierrez said Barry has ordered city officials to come up with a better printing system that would reduce the high costs. One option being considered is transferring the print shop to the D.C. Department of Corrections, which runs a separate printing operation that does some work for city agencies.

City officials are conducting a survey of city agencies' printing needs as part of the effort to come up with a more efficient and cost-effective program, according to Thomas Hoey, a productivity specialist who works for City Administrator Thomas Downs.

"Over the years, things have gotten a little unglued," Hoey said.

He said there is little data available about the city's true printing requirements, but the survey is expected to yield information that will enable the city to come up with a better system.

Gutierrez said that in most cases city agencies are required to go through the city's print shop, but that the high costs have caused some agencies to circumvent the rules so that they can hire private printers.

For example, Gutierrez said, agencies have the power to purchase services for less than $10,000 without having to go through his department, which is the city government's central purchasing agency. So, he said, some agencies are splitting printing jobs into several parts, each less than $10,000, and thereby they are able to hire private printers directly.

In an unrelated matter, Gutierrez told the council committee yesterday that the city is negotiating to buy telephone equipment from AT&T as an interim measure until the city is ready to buy a new telephone system.

He said the city currently pays $3 million a year to rent its phones. He said it would be cheaper to buy the equipment -- which he estimates will cost about $1.5 million -- than to continue leasing, because it will be about a year before the city will be ready to solicit bids for the new system.