A federal judge in Alexandria yesterday said he is considering dismissing an indictment charging fraud against Litton Industries because U.S. government investigators and prosecutors "behaved badly" in their dealings with a federal grand injury that indicted Litton last month.

The request for dismissal of the indictment, which came from Litton, "bothers me," said U.S. District Court Judge Albert C. Bryan Jr.

"The government behaved badly here," Bryan said. "Whether it behaved badly enough" for dismissal, "is the issue I have to decide."

Litton Industries, a major defense contractor, was indicted April 6 on a charge of fraudulently overcharging the Navy $37 million for building three nuclear submarines between 1968 and 1971.

The government empaneled a special 18-month grand jury March 17, 1975, to investigate the Navy's charges against Litton, but that grand jury's term expired without its returning an indictment.

But meanwhile, April, 1976, the Armed Services Board of Contract Appeals awarded a $17.3 million judgment to Litton from the Navy in connection with the submarine contract.

Litton alleged yesterday that U.S. attorneys "improperly pressured" Litton to reopen the appeals board proceedings, in exchange for which they said they would stop their investigations.

By reopening the proceedings the government had the opportunity to gave the award decreased or dropped and could delay Litton's collection, according to Litton.

When Litton refused to reopen the proceedings, U.S. attorneys "implemented (their) express and implicit threats," Litton alleged, by obtaining the April 6 grand jury indictment.

Litton also claimed that a U.S. attorney told Litton attorneys last month that "Litton bought this indictment."

U.S. attorneys replied that discussions concerning the reopening of the proceedings had been predicted on the the understanding that no threats, intimidation of misconduct by them would be involved. "Had these assurances not been given, the discussions would never have occured," stated a brief filed in U.S. District Court on the government's behalf.

"The government never said it would seek an indictment if Litton did not join in the profferred plan," the government's argument continued. "The government said only that if its plan could not be worked out the investigation would continue.

Litton also alleged that U.S. prosecutors interrogated the contract board judges after their decision in favor of Litton. Litton claimed the purpose of this was to affect future board proceedings involving Litton.

The government said they questioned the judges "under its role of assisting the grand injury in its duty to search for every clue and piece of evidence to find if a crime has been committed."

The government also said it contracted the judges concerning information they thought he was relevant and that the judges had nothing pendning before them at that time.

Bryan said he would let Litton and the U.S. prosecutors know his decision as soon as possible.