Mayor Marion Barry's rough and graceless response to city official Jose Gutierrez's allegations that all is not kosher in the way the District awards contracts suggests that Gutierrez may have done serious political damage to the administration.

Gutierrez, the highest ranking Hispanic in the mayor's cabinet until a week ago when he was demoted and banished to an obscure government post, stated publicly what many people have long suspected: That fat city contracts frequently are handed out to political allies of the mayor.

In making his allegations, Gutierrez singled out City Administrator Thomas Downs as one of the higher-ups who frequently meddled in the contracting procedures of the Department of Administrative Services -- the city's chief purchasing agency that was formerly headed by Gutierrez.

Both Barry and Downs have denied Gutierrez's allegations and have indicated in a number of ways that their biggest mistake was in tolerating the incompetence of Gutierrez and his deputies for as long as they did.

The mayor's response to Gutierrez's allegations has been to order his legal counsel, Herbert O. Reid Sr., to investigate Gutierrez to see if he did anything wrong while heading the Department of Administrative Services and to clean house swiftly in the department, getting rid of Gutierrez allies and potential troublemakers and replacing them with trusted officials who know how to take orders.

By assuming the perilous role of whistle blower, Gutierrez has thrown open the administration to a line of inquiry that may result in considerable embarrassment for Barry down the road.

While Barry has prescribed the areas that he wants probed by Reid, the prominent and respected civil rights lawyer has indicated that his plan is to examine closely a number of city contracts and that no official, including the city administrator, will be immune from his scrutiny.

What's more, Gutierrez's allegations have prompted at least three D.C. City Council members to call for council reviews of the city's contracting procedures.

A major area of concern involves the Chesapeake and Potomac Telephone Co.'s efforts to win three contracts with the city, including one to provide services to the new municipal office building at 14th and U streets NW.

Thomas J. Mattingly, a telecommunications consultant hired by Gutierrez, has charged that Delano Lewis, C&P's executive vice president and a longtime political supporter of the mayor, exerted pressure after Mattingly and Gutierrez raised questions about the merits of C&P's proposals.

The administration responded by having Mattingly fired and then arrested when he refused to clear out of his government office.

Mark Plotkin, a Ward 3 member of the D.C. Democratic State Committee and a critic of C&P, said there is another aspect to the mayor's attitude toward C&P that deserves further scrutiny.

Plotkin said that Barry is highly vulnerable to criticism that he has stood by quietly while his friends at C&P repeatedly have sought massive residential rate increases.

Finally, the controversy over Gutierrez's demotion and rough treatment has fueled criticism within the city's Hispanic community that the mayor is insensitive to their needs and problems.

While the Hispanic community is not united in its support of Gutierrez, clearly the administration needs to do a lot of fence mending before the 1986 election.

Here's one from the "Stand By Your Friends" department:

For years, Ivanhoe Donaldson unquestionably has been Barry's closest political adviser and a good friend. It was Donaldson, after all, who engineered Barry's two mayoral election victories, in 1978 and 1982. Donaldson also held a number of high-level posts in Barry's administration, including deputy mayor for economic development.

But now, in light of published reports that Donaldson is being investigated by federal authorities for possibly having mishandled a large sum of money while he headed the D.C. Department of Employment Services, Barry is putting considerable daylight between himself and Donaldson.

In an interview this week with the New York Times, Barry said he considered Donaldson only one of "20 to 25" political aides -- a joke to anyone who follows District politics.

The mayor went on to say: "Assume the worst. Assume some grand jury indicts Mr. Donaldson. You add that up like you do anything else. Out of 150 people that work in my administration in high positions, one or two are alleged to have done something. That's a hell of a batting average."