Mayor Marion Barry warned the D.C. City Council yesterday that an arbitration panel's recent ruling in favor of police officers' contract demands, if allowed to stand, would cause "serious adverse fiscal consequences" for the city and undermine future collective bargaining.

Barry also accused the Fraternal Order of Police (FOP), representing 3,300 D.C. police officers, of having bargained in bad faith by holding out for unreasonable contract demands in hopes of getting a favorable arbitration ruling.

"It is clear to me that the union preferred arbitration to good faith bargaining and did little to avoid the eventual impasse," Barry said in an eight-page memorandum he distributed to council members who attended a briefing in his office.

Gary Hankins, chairman of the FOP's labor committee, could not be reached for comment yesterday. However, Hankins said recently that the union played "fair and square" in the bargaining process and that the mayor is now trying to subvert the city's labor law by seeking support from the council to overturn the ruling.

The ruling, if allowed to stand, would provide police officers with $23 million more in pay and benefits than the administration was willing to offer. It would also discard the longstanding principle that police and firefighters should receive the same salaries.

The mayor said yesterday he is considering at least three possible steps to overturn the contract award, including an appeal to the D.C. Public Employees Relations Board, a court challenge and asking the City Council to vote to overturn it. An aide to the mayor said this week that Barry intends to formally seek council support to overturn the contract.

However, City Council Chairman David A. Clarke, who attended the one-hour meeting, said he doubts the mayor could muster the necessary two-thirds vote.

"At this point I don't believe he has the votes, but that doesn't mean the votes are locked in against him," Clarke said. " . . . I think the burden of proof and persuasion is on the mayor's shoulders."

Barry told council members that the city might have to come up with $137 million if other public employe unions that have already signed new three-year contracts obtain additional pay concessions to match the police officers' award.

"I simply cannot believe that the administration's longstanding commitment to fiscal integrity and prudence will simply be disregarded by the council, thereby allowing the arbitration panel to impose a minimum $23 million and maximum $160 million burden on this community and its taxpayers."

The contract award includes pay increases of 4.5 percent in the first year, 5 percent in the second year and 5.5 percent in the final year. The police officers would also receive a 30 percent increase in dental coverage for individuals and prepaid legal services not available to other city employes.

The administration had offered a 3 percent bonus in the first year, a 4 percent salary increase in the second and third years, and a 1.5 percent increase or "kicker" at the end of the contract.