The U.S. General Services Administration, reacting to criticism from a House subcommittee, has abruptly abandoned its plans to sell a 107-acre tract of surplus Army land valued at $3 million to Fairfax County for the construction of luxury apartments for retired Army officers.

"Rather than continue to pursue a negotiated sale with the county, we will offer the property for sale to the general public on a competitive bid basis," Paul K. Trause, deputy GSA administrator, said in a letter sent Friday to the House subcommittee on government activities and transportation.

The sudden turnabout came soon after the GSA received a highly critical report from the subcommittee chairwoman, Rep. Cardiss Collins (D-Ill.). She charged that GSA officials had undervalued the land at an intersection on the western edge of Fort Belvoir and improperly allowed the county to negotiate on behalf of a private, nonprofit group of retired Army officers from the Washington area.

Collins also charged that it was improper for Fairfax to be allowed to buy federal land to benefit "a select and narrow group."

"In effect, the county lent its good offices as an eligible negotiating party under the law to an ineligible party," Collins said in her letter and subcommittee report to the GSA. "It amounts to the county's being able to provide a favorable real estate opportunity to a particular private developer that it happens to prefer."

Fairfax County Executive J. Hamilton Lambert took issue with Collins, saying the county was merely acting as a conduit "for nonprofit people who were trying to provide a service."

"I don't see what we've done wrong," he said. "The GSA recommended we do it that way."

The Army Retirement Residence Foundation had won the county's backing to build 285 apartments, 39 one-story cottages and a 120-bed health care center on the surplus site, at Rte. 1 and Telegraph Road in southeastern Fairfax.

The complex would be available to retired Army officers and their spouses, according to Frank A. Camm, a retired lieutenant general and president of the foundation. He estimated that more than 95 percent of those eligible for the apartments were retired lieutenant colonels, colonels and generals.

The foundation, through Fairfax County officials, had offered to pay the GSA $3,093,750 for the vacant federally owned parcel. That price was based on GSA-authorized appraisals. The foundation had reached a preliminary agreement with the Marriott Corp. to develop the retirement complex, Camm said.

Camm said yesterday that the foundation will bid on the land. He criticized the subcommittee for "implying that we were looking for a special deal. We're not asking for any special consideration from anybody.

"We were assured from the beginning by the GSA that we were doing things properly," he said. Referring to the House report, Camm said, "I don't see why Big Brother should be trying to impose his will on a group that was willing to pay the fair market price for that property."

In her report, Collins said the proposed land sale was "seriously compromised" from the beginning, in April 1984, when Fairfax County agreed to act as an intermediary for the foundation.

Collins said the GSA violated federal regulations by permitting foundation officials to participate in its negotiations with the county. She added that the GSA appears to have allowed the foundation to name its price instead of "bargaining vigorously" to obtain the best price on what she described as "prime real estate."

The negotiations were further compromised, Collins said, by the foundation's receipt of a GSA report containing the details of appraisals conducted for the agency. Collins said that an "unprecedented lapse" in GSA procedures "seriously prejudiced" additional negotiations.

The GSA, which is required to obtain the highest possible value for surplus government land, could negotiate a much higher price than the county offer, she said.

Trause, the GSA's number-two official, acknowledged in a response to Collins that a GSA official had "inadvertently" released the appraisals but said it "in no way compromised the sale." He said the confidential information changed hands "after we had concluded negotiations with the county."

Trause said he has asked the Inspector General's Office to investigate the release of the appraisals.

Camm had been extremely excited about propects for the facility. "I think we have a beautiful example here of people who want to take care of their own identity with their own resources," he said Friday. "We wanted to have a place where people who knew each other and have been through the same experiences could grow old together."

Camm said that the minimum entry fee for those eligible would have been $90,000 and that there would be an additional $1,000-a-month charge. He said the officers would not own the units but would be given lifetime use of them. He described the parcel as an ideal location.

He said foundation members had become increasingly frustrated by "interminable delays" in their attempt to acquire the property. He said the GSA has advised them all along that the negotiations were being handled properly but had raised questions about who would have access to the facility.

"What right does the government have to insist we operate the facility in a particular way as long as we pay the appraised price for the land?" Camm said.

"Is it fair to tell us to take care of the poor members of our profession?"