A U.S. District Court judge here ruled yesterday that the General Services Administration illegally "blacklisted" the government's chief supplier of steel desks, cabinets and bookcases from further federal comtracts even though the agency had no evidence of wrongdoing on the company's part.

Judge Harold H. Greene ordered GSA to reinstate a $9.4 million contract with Art Metal-U.S.A. Inc., a Newark, N.J., firm, to supply the government vertical file cabinets. Greene also ordered GSA to continue to consider awarding additional contracts to Art Metal unless it has a "basis for charges" against the firm.

Art Metal has for more than two decades supplied the vast majority of the steel office furniture that GSA has purchased for use by federal agencies which frequently have complained that the Art Metal equipment is inferior and faulty and has required extensive repairs.

With the mounting revelations of GSA corruption in recent months. GSA in August canceled Art Metal's contract for the file cabinets "with no explanation other than "for the convenience of the government,'" Greene said in his opinion.

Greene said that while the continuing federal investigation into GSA wrongdoing is to be "highly commended" the agency could not cancel Art Metal contract and forbid it from further contracts without giving substantive reasons to the company and following GSA procedures for revoking contracts.

Greene said testimony in the case from top GSA officials, including Administrator Jay Solomon, showed that the agency's "primary concern" in canceling the contract was "public relations" and that "the lack of substantiating evidence (for the cancellation) was well known.'"

Greene said that the first "high level (GSA) discussions" of the Art Metal contract appear to have occurred when Robert Graham, commissioner of the Federal Supply Service, informed Solomon of the Aug. 24 contract award.

Graham testified that Solomon's reaction was: "How in God's world could there be an award to Art Metal in view of the fact that there is so much going on in the papers?"

But William Richardson director of GSA's furniture center testified that "we had nothing in our files to substantiate the articles written by Mr. Kessler" a reference to Ronald Kessler a Washington Post reporter who has written extensively about GSA corruption and had reported the problems government agencies had with Art Metal's products.

Greene said that the investigation of Art Metal's contract performance "may have been in progress ever since June, but after almost four months GSA has yet to develop sufficient evidence to so much as inform Art Metal of its alleged wrongdoing.

"Finally not only has the investigation not been completed, but nobody is able to give even a rought approximation as to when it might be,'" Greene said.

Greene chastised GSA for its actions in the Art Metal case, saying that "the public interest is not served when the end of a more honest and efficient government is sought to be achieved through means other than those prescribed by law, nor is it served by official blacklisting based not on evidence but on the premises that to do otherwise 'wouldn't look very good.

"Moreover, our system of laws does not operate on the principle of the queen in Alice in Wonderland - "Sentence first, verdict afterwards." It requires the evidence to come first."

Greene said that "if and when GSA has a basis for charges against Art Metal, it may by all means deny further contracts to that company, cancel existing contracts and take any other appropriate measures. But not until then."