About 100 people demonstrated outside the headquarters of the D.C. Commission on Mental Health Services yesterday, protesting the agency's decision to cancel a major contract with one of the oldest Latino community-based organizations in the city.

Andromeda Transcultural, a Columbia Heights group that has provided bilingual mental health services to Latino residents since 1970, could be forced to shut down if it loses the contract, said Ricardo Galbis, Andromeda's executive director. The group currently has about 400 clients, he said.

Galbis said Andromeda is appealing the commission's decision this month to stop funding the organization and to award a two-year, $350,000 contract to another nonprofit group, the Anchor Mental Health Association. He acknowledged that Anchor submitted a lower bid but said it doesn't have enough experience providing mental health and substance abuse treatment to Latinos, many of whom don't speak English and fled violence in their homelands.

John Kuhn, chief executive officer of Anchor, said his group has 41 years of experience and is capable of handling the contract to treat 40 ethnic-minority patients suffering from mental illness and addiction. Most of the patients are expected to be Latinos.

But protesters, who gathered at the commission's offices in the 4300 block of Connecticut Avenue NW, said awarding the contract to Anchor was indicative of the panel's lack of concern for the city's Latino population and its refusal to rely on community-based organizations to deliver services.

"It might be legal, but it's profoundly unfair," said Arnoldo Ramos, director of the Council of Latino Agencies, a coalition of community organizations in the District. "No agency has the same experience as Andromeda. It's located in the community. It's staffed almost 24 hours a day by people who have been working these patients for years. You can't replace that."

During the protest, several activists asked to speak with Scott Nelson, the court-appointed receiver who runs the agency, but were told he was unavailable.

Johnny Allem, the commission's director of operations, said in a telephone interview that Andromeda has been a "valuable supplier of services" but wasn't the lowest bidder. He said the commission established a multicultural services division in 1987 to help serve clients from ethnic-minority populations.

But Galbis said the division doesn't do enough. He said it doesn't provide a 24-hour bilingual hot line, emergency services for Latinos or programs designed specifically to help Latino children.

Andromeda was invited to bid on the new contract after the commission canceled its previous $220,000 contract to treat 65 to 75 patients--a contract that Galbis said represented half of Andromeda's operating budget.