House and Senate negotiators yesterday dropped an antiabortion amendment that had been added to the District of Columbia's fiscal 1986 appropriations bill by the House and eliminated another House proposal that all city contracts be bid competitively.

Both House provisions in the $2.7 billion measure had been of serious concern to District officials. The antiabortion measure would have prevented the District from using its own revenues to pay for abortions for poor women -- a restriction not placed on any other local jurisdiction.

The Senate last month defeated two attempts to place strict prohibitions on abortion funding by the city in its version of the appropriations bill. The conferees retained language in existing law prohibiting the use of federal funds for abortions except when the mother's life is in danger or in cases of rape or incest.

The House had approved the requirement that all D.C. contracts be bid competitively in an attempt to prevent favoritism and overpricing. However, city officials argued that this provision could hurt the District's minority contracting program and would make it difficult to deal with emergency situations.

The conferees decided instead to include language in their report on the bill stating their "hope" that District contracting "can be fairly and honestly operated under District of Columbia law." They also directed the city government to retain public records in "each and every instance" when it awards contracts without competition, including extensions and renewals.

The legislation approved by the conferees yesterday now must be approved by the House and the Senate before going to the president for his signature.

The bill also includes $30 million in federal funds added by the Senate for design and construction of a prison in the District. The conference approved an amendment stating that the money will not be released, however, until the District submits a prison construction plan to Congress, including the site, size and cost.

In proposing that amendment, Rep. Julian C. Dixon (D-Calif.), chairman of the House Appropriations subcommittee on the District, said he had no objection to the federal government's providing the funds and that he accepts the need for a prison. But he noted that a city commission studying the issue has opposed a new prison and said "it appears the District at this time is uncertain what it is going to do."

Sen. Arlen Specter (R-Pa.), chairman of the Senate Appropriations subcommittee on the District, who has been pushing the city to build a prison, said that Mayor Marion Barry "assures me that he will get it [a new prison] done." Barry early this year reluctantly supported construction as long as such a facility is built with federal funds.

When the abortion issue came up, Dixon pointed to the 221-to-199 vote in the House for the strict restriction and told the Senate conferees that, "I am philosophically on your side" against the prohibition.

The conference also:

*Added $150,000 in federal funds proposed by Dixon for the city to use to deal with its high rate of high school dropouts.

*Approved a tax break for congressmen who live in Virginia by exempting them from the personal property tax on their cars there, on the theory that they already pay vehicle taxes in their home states.

*Required the mayor to find $15 million in his budget to help pay off the accumulated general fund deficit that stood at $269.9 million at the end of September 1984.