A Teamsters Union official agreed in 1974 to the setting of substandard wages for workers on a $46 million Capitol Beltway construction project to help a major Washington area construction firm win the competitive bid, according to union documents.

The low wages were justified then as a way of obtaining jobs for union members in the face of increasing competition from construction firms employing lower paid nonunion labor. But not one of the men ultimately employed ever became a Teamster member, according to an internal memo prepared by international Teamsters officials last year.

The relationship between the Teamster official who signed the contract - former Local 639 President Frank DeBrouse - and the firm that won the beltway job - Excavation Construction Inc. - is currently the subject of a wideranging federal investigation. The U.S. attorney's office in Baltimore is investigating allegations that officers of the firm built a lavish home for DeBrouse in Anne Arundel County, in exchange for favored threatment from DeBrouse's union.

The memo about the contract for the widening of the beltway in Virginia was prepared last year by the general secretary-treasurer of the International Brotherhood of Teamster and obtained recently by The Washington Post.

In the memo, the international official exonerated DeBrouse of any violations of union regulations. But he also confirmed what the official called the "substandard" contract that DeBrouse negotiated and the fact that it was agreed to as a way of helping Excavation Construction enhance its competitive position.

But because the union failed to provide the proper checkoff cards required by law for the collection of union dues, none of the workers became union members and some $40,000 collected as "dues" was returned to Excavation Construction Inc., according to union officials.

This thing was so messed up it was "unbelievable," said a spokesman for the International Teamsters. "DeBrouse didn't give them the cards and the men did't become members because their dues weren't paid. They should have become members."

DeBrouse's attorney, Al Ahern, said that the union contract was "putting bread in (union members') mouths - it was in the interest of the union that this contract was completed. In Virginia, you're dealing with a nonunion situation anyway."

Throughout his career as president of Local 639, DeBrouse was associated in ways uncommon for a unionleader with Excavation Construction and its President, John W. Lyon.In1973, Lyon's firm held a campaign party for DeBrouse's reelection, providing drinks and overtime pay for union members who attended.

In a written opinion regarding the party, U.S. Appeals Court Chief Judge Harold Leaventhal found "the occurence of employer assistance to incumbents in the course of a government-supervised election . . . indeed troubling."

That same year DeBrouse, earned $40,00 then, moved into a large, contemporary home constructed in Anne Arundel County By Lyon Builders Inc., whose president is Lyon. The house, on 2.7 acres with a backyard swimming pool, is valued at some $200,000 now. It is also the focus of a pending suit by Lyon asking DeBrouse to pay him an undisclosed amount of money, according to DeBrouse's attorney.

The investigation, according to sources, is scrutinizing allegations that a pattern of favors existed between former key Teamster officials in Baltimore and Washington and multimillion-dollar construction firms.

It is alleged that union leaders and construction executives benefited while union members unknowingly lost money from their pension and health funds and failed to win well-paying union contracts.

The complicated Teamster involvement in the beltway contract was pieced together from interviews with union officials and their attorneys and from documents obtained by The Washington Post.

In the memo issued last year, the general secretary-treasurer of the International Teamsters found that the "substandard" contract giving Teamsters some $2.50 an hour less than the prevailing wage awas signed in hopes "that the agreement would permit a unionized construction company to compete with the nonunion construction companies bidding on the beltway project."