ABOUT 17 months ago, the D.C. Council passed a procurement and practices law that focuses on the awarding of city contracts. But the District government's reputation, and the wallets of taxpayers, continue to suffer from the fact that the law's regulations are not yet in effect. There is also no thorough system of performance evaluation. This is one D.C. government commitment that deserves to be on an accelerated track.

The latest failing is a $216,739 D.C. Department of Human Services contract that went to a minority firm early in 1986 to provide four "crisis beds" for mentally ill individuals who could be treated without hospitalization. The contract was to provide a residential facility for 24-hour care for nine months. Most of the patients were to be referred by the city's emergency psychiatric unit. The care was intended to be less costly than that available at St. Elizabeths Hospital.

First, the firm had no place to treat patients. Although it did not open a facility for six months, the city continued to pay as though it were open all along. In April 1986, the contract was canceled. Two days later, the cancelation was rescinded. The firm finally began accepting patients on July 7. In the nine months of the contract, the firm provided crisis care for only 12 weeks, but it received just $3,000 less than the full amount of the contract money. City officials and a lawyer for the firm's chief executive officer have blamed the costs of helping the firm get under way.

In the next two years, some 600 mental patients will be released from St. Elizabeths Hospital. Hundreds of the chronically mentally ill are already on the outside, in need of regular care and crisis treatment. The city is already under a court order demanding that it provide comprehensive outpatient care. Only a limited amount of funds are available, and they must be well spent. That ought to be the overriding consideration when it is time to decide whether a contract should be canceled or continue