Two former staff members of the D.C. Department of Human Services steered a $317,000 department contract in 1986 to a firm linked to businessman John Clyburn, cheating city taxpayers and depriving them of honest government, a prosecutor told a jury here yesterday.

Assistant U.S. Attorney Rhonda Fields made those remarks on the first day of the conspiracy trial of former employees Gladys Baxley and Michael Davis. The case is the third prosecution spawned by a wide-ranging FBI investigation begun in 1986 into alleged corruption in the administration of Mayor Marion Barry.

In a related development, U.S. District Judge Joyce Hens Green issued an order yesterday to U.S. Attorney Jay B. Stephens telling him to decide by Monday whether he will seek a retrial of one of the two related cases: the contract fraud case against Clyburn and James E. Baugh, a former official at the U.S. Department of Housing and Urban Development.

That case ended with a hung jury last month. The other related trial, targeting Clyburn and former human services head David E. Rivers, ended in acquittals last July. Judy Smith, a spokesman for Stephens's office, said this week that no decision has been made on whether to seek a new trial in the Clyburn-Baugh case.

The three contract steering cases, as well as a fourth that has yet to go to trial, are part of a web of business, social and political friendships among Clyburn, Rivers, the mayor, and several black-owned businesses Clyburn was trying to help in their quest for city contracts.

News of the investigation broke in early 1987. Barry has since denounced it as part of a racially motivated vendetta against his administration on the part of the FBI, then-U.S. Attorney Joseph diGenova and Stephens. Attorneys for the defendants have argued that the contract procedures in the cases show only the influence of politics, bureaucratic infighting and networking by black business owners -- not kickbacks or corruption.

But Fields told the jury yesterday that Baxley agreed to help JMC Associates, a firm that Fields said was not well qualified to do the work human services wanted it to do, because she was about to lose her job in a department reorganization. Baxley knew that Clyburn, a friend of JMC's owner, could use his influence to help her, Fields said. Davis, an old friend of both Rivers and Clyburn, at one point told Clyburn that Baxley was ready to be "a team player" to help JMC, Fields said.

"Gladys Baxley knew very well that the quid pro quo for her selling out was her help to JMC," Fields told the jury. JMC had no experience in running halfway houses for mental patients, the subject of the human services contract, and submitted the highest cost-per-bed estimate of any of the competing firms, the prosecutor said.

By helping JMC win the contract anyway, Fields told the jury, "Baxley and Davis conspired to defraud the District of Columbia and its citizens of an honest government."

Baxley's attorney, Frederick A. Douglas, waived his right to make an opening argument yesterday, reserving his time to speak to the jury at the end of the case.

Davis's attorney, Frederick J. Sullivan, told the jury that the government's evidence would show that Davis and Baxley were friends and that Davis was indeed using his friendship with Clyburn and Rivers to help Baxley keep her job. But that, he said, was simply office politics -- not breaking the law.

"There are all kinds of interactions," Sullivan said. "It's all there." But, he added, "there was no fraud perpetrated on the District of Columbia. There was no crime."