This time it was the Army that had the Indians surrounded, and the two Sioux chiefs said they like the idea.

The encirclement occurred at a Pentagon press conference called yesterday to announce that the Army was going to pay two Sioux tribes $15.6 million to make it camouflage nets.

Sioux Chief Normal Hollow, standing with Army Secretary Clifford L. Alexander on his right and two Army generals on his left, noted that his tribe had made pretty good use of camouflage in destroying the army of Lt. Col. George A. Custer at the battle of Little Big Horn in 1876.

Contrary to reports, said Chief Hollow, Custer did not sneak up on the Indian encampments along Rosebud Creek in the Dakota Territory - now Montana."From stories of elders in the tribe," said the chief, "we know that the Indians were well aware of the movements" of Custer and his men before the big battle.

Alexander tried to keep the press conference on the Army's intensified effort to help Indians and other minorities by awarding their firms more contracts like the ones for the camouflage nets.

By fiscal 1979, Alexander promised, the Army will at least double the $120 million in contracts it awarded to minority-operated firms in fiscal 1977. "It's the most viable program for helping the disadvantaged," he said.

But, taking the subject back to the Battle of Little Big Horn, a reporter pressed the two Sioux chiefs to explain how their forebears managed to beat Custer so decisively.

"I'd rather not comment," said Chief Hollow of A & S Industries, which will make 40,000 camouflage nets for $3.3 million at the federal Indian reservation at Fort Peck, Montana.

"Same comment," said the other chief, Carl McKay, whose tribe at the Fort Totten reservation in North Dakota is to get $12.3 million for its work.

Both chiefs said they welcomed the Army work, with Chief Hollow estimating that yesterday's addition to existing camouflage contracts would provide his reservation with 106 jobs and McKay stating it would mean 250 jobs to his tribe.

"You had us surrounded by the Army when you asked those questions about Custer," Paul A. Roessler, a Navajo who heads economic development at the Bureau of Indian Affairs, told a reporter after the television lights went out at the press conference.

Asked why he did not expound on why Custer was defeated at Little Big Horn, Chief McKay said: "The contract isn't signed yet."