D.C. Board of Education officials bypassed the contracting procedure that has been used for every school system contract exceeding $10,000 when they awarded a legal services contract that has earned local lawyer Willie L. Leftwich $4.5 million, board officials said yesterday.

Board members, rather than rely on the school system's contract specialists and legal adviser to prepare the sole-source contract, drafted and negotiated the 1984 agreement themselves. Several board members now say they regret their actions, which, while apparently legal, were a departure from the usual practice.

The contract to prepare a civil suit against asbestos manufacturers and suppliers has come under fire from D.C. Auditor Otis H. Troupe, who concluded in a draft audit disclosed last week that "the board approached a serious and important issue in a wrong and very costly way."

Board members said yesterday the board customarily uses the school system's procurement office to hire contractors, except for minor contracts under $10,000 to produce newsletters or rent convention or hotel space.

All sole-source contracts -- agreements that are reached without competitive bids -- are also normally reviewed by the school system's legal counsel, George H. Margolies.

Several other questions have been raised by board members in the wake of the draft audit, including how potentially costly provisions in the contract were included without the knowledge of the majority of board members; whether one board member had a conflict of interest because he was once represented in a civil lawsuit by Leftwich, and whether Mayor Marion Barry approved the use of school capital funds to pay for the contract, an arrangement that was questioned by Troupe.

Board member Nate Bush (Ward 7), the board's Finance Committee chairman and a member of the ad-hoc committee that drafted the contract, said yesterday he and others thought the contract could be handled outside the usual process because they believed it wouldn't cost more than about $20,000 apiece.

Bush said he did not envision any higher fees because he thought Leftwich was hired only to advise the board on the actions of the city's own lawyers, not to represent the board in the asbestos suit.

The Rev. David H. Eaton, who signed the contract in December 1984 as the board's president, said yesterday he did not want to use the usual contracting procedures because he wanted to respond quickly to a directive from the U.S. Environmental Protection Agency to show progress on the schools' asbestos problem.

Margolies disputed Eaton, however, saying that the hiring of Leftwich had no relationship to the EPA's directive and did not help satisfy the federal agency's concern.

According to Bush and other board members, the contract that Eaton signed contained a key provision that was not included in the committee's draft.

The provision requires the school board to pay Leftwich an additional $50 an hour if the board wins $1 million from the asbestos companies in court.

Board member R. Calvin Lockridge (Ward 8) said yesterday the provision could cost the school board an additional $800,000.

Lockridge also questioned whether R. David Hall, who succeeded Eaton as president of the board in Janauary 1985, had a conflict of interest because he had previously hired Leftwich's firm. Hall was responsible for administering the contract during the three years he was president, a period during which Troupe said the cost of the contract was poorly controlled.

Leftwich's previous firm -- Hudson, Leftwich & Davenport -- represented Hall in a lawsuit he filed against a real estate client, according to Ronald Jessamy, the lawyer who handled the trial for Leftwich's firm.

Jessamy, who is now with the firm of Jessamy, Fort & Ogletree, said Hall won a judgment of about $6,000 in late 1983 and paid a standard contingency fee to the firm. Hall said in an interview that he was not involved in the selection of Leftwich for the asbestos contract and that he disclosed the relationship to Eaton when the contract was under consideration.

Eaton said yesterday, however, "I didn't know that until you just told me, four minutes ago."

Hall told D.C. Council Chairman David A. Clarke in a letter that the school board's Finance Committee was reviewing the bills from Leftwich. But Bush, the committee chairman, said he refused to review them because of his concern about the purpose and rising costs of the contract.

In a 1987 memo to Hall, Bush said he had previously decided "the Finance Committee would neither accept responsibility for nor exercise oversight over the monitoring of legal fees."

The rising costs led the school board ultimately to draw $3.6 million from capital funds set aside for asbestos removal. In his report, Troupe called those expenditures "absolutely inappropriate."

A high-ranking school official who asked not to be identified said Hall told him that Barry approved the use of those funds.

John C. White, Barry's press spokesman, said last night, "That was a decision by the school board . . . . The mayor said he was not involved in it."

Staff writer Tom Sherwood contributed to this report.