With less than five months to go before the District and federal governments are scheduled to throw a joint millennium gala, the city has canceled the permit given to a Virginia company in March for the Pennsylvania Avenue portion of the celebration.

Michael Harrigan, president of the LEAP Group, said he was notified late last week that the District had revoked the firm's permit for a huge food festival on Pennsylvania Avenue for the three evenings of the New Year's Eve weekend. Harrigan said the city gave him no reason for the cancellation.

"We are very shocked," he said. "We don't understand what happened. We started this process 18 months ago."

Harrigan said the company had not decided how to respond to the cancellation. "We are exploring several options," he said.

On Friday, Sandy McCall, special assistant to Mayor Anthony A. Williams (D), said the city had given the LEAP Group a permit for the street closing but had never signed a contract.

"We were in negotiations with them and have now broken that off," McCall said. "We are actively pursuing other people."

He refused to say why the city had decided not to work with the LEAP Group, but he said he was confident the District would find another contractor to run the event.

A White House official said the situation did not present a major setback, although the sudden loss of the city's chosen vendor would appear to create a serious problem for festival planners.

Paul McCarthy, newly appointed executive director of America's Millennium, said his job was to coordinate the Washington celebration for the White House.

"We will make this a team effort," he said. "We will do everything we can to help the city."

In July, the White House, the Smithsonian Institution and the District announced a three-day event culminating at the Lincoln Memorial on New Year's Eve with a concert orchestrated by Quincy Jones and produced by George Stevens Jr., a 20-minute film by Steven Spielberg and an original score by composer John Williams.

The Smithsonian said its participation would include a teach-in on the Mall with significant figures from sports, the arts and other fields talking to children about their lives. The District is expected to organize the street party for each evening of the three-day weekend.