The Metro transit system, reversing its stand on a controversial issue, opened the way yesterday for competition over purchases of more than $20 million worth of equipment for its trouble-plagued Farecard system.

In March, the Metro board had voted in a closed session to buy the fare collection equipment without competitive bidding from the company that produced the subway system's current machines. The move drew protests from a rival firm and caused concern among federal officials and members of Congress.

"We're looking to expand competition," Metro General Manager Carmen E. Turner said yesterday. After reexamining the issue, Turner said, she concluded that competition would "ensure that we get the best equipment" at an acceptable price.

The 274 new Farecard machines, estimated to cost $20.7 million largely in federal funds, are needed mainly to equip new subway stations scheduled to open in the early 1990s. Officials said some of the machines also may be installed in existing stations where passengers face delays in buying Farecards.

The Farecard system has been widely criticized because of its high costs and frequent malfunctions. Metro has spent more than $70 million on the equipment, manufactured by Cubic Western Data, a subsidiary of the San Diego-based Cubic Corp.

Cubic officials have warned that competition may result in violating the company's right to protect trade secrets. Cubic and some Metro officials also argued that buying equipment from another company could lead to higher maintenance costs and more breakdowns -- points disputed by the rival firm.

"We don't comprehend how you can run a meaningful competition with proprietary data," said Raymond L. deKozan, chairman of Cubic Western Data, adding that Cubic officials plan to "keep a very close eye" on Metro's procedures.

Lanny J. Davis, a lawyer for Alta Technology Inc., the rival company, hailed Metro's action as "a major step forward in procurement policy."

In another development yesterday, the Metro board voted to buy buses for the first time since an earlier purchase set off a controversy.

Last year, Metro withdrew 76 buses from service after detecting hazardous cracks in their undercarriages. Seventy-one of the buses, produced by Neoplan U.S.A. Corp., a West German-affiliated company, have been repaired, officials said. Five remain out of service.

Metro later revamped its procedures in an attempt to avoid buying defective buses. The board awarded the $20.6 million contract to Flxible Corp., a long-established bus manufacturer, after weighing the buses' reliability along with their cost. Officials said they expect the 150 new buses to prove dependable.

In other developments:

*The transit agency announced it will start providing subway service until midnight on Sundays as of June 29, a week sooner than planned. Sunday service now ends at 6 p.m.

*The board voted to buy $3.9 million worth of electronic fare boxes designed to prevent riders from cheating on bus fares. The boxes, expected to save Metro millions of dollars a year, will initially be installed on buses serving the District and Montgomery County.