The House Appropriations Committee voted yesterday to require the District of Columbia to award all of its contracts through competitive bidding, in an effort to prevent favoritism and overpricing in city contracting.

City officials said they are seriously concerned about the impact of the amendment on minority contracting and on contracts for emergency needs.

But the author of the amendment, Rep. Ralph Regula (R-Ohio), said competitive bidding is "just good management" and that he is not trying to undermine the city's program of setting aside 35 percent of its contracts for bids from certified minority firms. Regula's amendment was added to the District's fiscal 1986 appropriations bill.

D.C. purchasing officials have been criticized by federal officials and in news accounts for failing to ensure a fair system of competitive bidding and for steering contracts to friends and political allies.

As a result of skirting competitive bidding procedures, the District pays as much as 79 percent more than surrounding suburban jurisdictions for a wide range of supplies, according to a six-month investigation last year by The Washington Post.

Rep. Julian C. Dixon (D-Calif.), chairman of the District appropriations subcommittee, said he feared that the amendment might kill the city's strong minority contracting program. Under that program, firms certified by the D.C. Minority Business Opportunity Commission are allowed to bid on 35 percent of city contracts for goods and services that are set aside or "sheltered" for minority firms.

"As I interpret it the amendment , it would knock out the sheltered market," Dixon said at the committee meeting. But Dixon and city officials said they will review the amendment to see if it can be revised before final congressional action on the city's budget.

William B. Johnson, director of the D.C. Department of Administrative Services, the city's chief purchasing agency, estimated that 92 to 95 percent of the city's contracts are awarded by competitive bidding. Johnson said that in general more than one certified minority firm bids on each contract placed in the "sheltered" market, although there are exceptions.

So-called "sole-source" contracts, which the city negotiates with one company rather than selecting from among competing bids, generally are used when only one firm provides a service or commodity or for contracts valued at less than $10,000, according to Johnson.

Regula said he offered his amendment in response to a recent article in the Washington Times that said the city pays about $1 million a year more than it should for petroleum fuel under a negotiated $20 million contract with Tri-Continental Industries Inc. "Apparently the city sole-sources for large procurement contracts," Regula said in an interview after the committee meeting. "I can't see any problem with having competitive bidding."

But D.C. Budget Director Betsy Reveal said the city already has tough restrictions on sole-source contracting. She said this process is used when only one company has the technical expertise to do certain work. It also is necessary for emergencies, such as repairs to water mains or gas lines, she said.

The House is expected to consider the city's budget next week.

The committee yesterday approved language stating that in order to comply with a court order to reduce crowding at the D.C. Jail, the city should not transfer the overcrowding problem to Lorton Reformatory. Dixon said the city may have to contract with the federal government to take some of its prisoners.

Dixon also said he would support the $30 million in federal funding added to the District's budget by a Senate subcommittee Tuesday to build a new prison in the city.