The General Services Administration division that spends $3 billion of the agency's $5 billion annual budget is being reorganized to improve efficiency and reduce the chances for corruption.

William P. Kelly Jr., who heads GSA's federal supply service, which buys everything from cars and locomotives to paper clips and ball point pens, said the division would be changed March 1 to make responsibility for each function more clear.

"What appalled me about the place (the federal supply service) was the organization. I asked how many chairs we buy each year and got four or five different answers," said Kelly, who was appointed less than three months ago by GSA Administrator Jay Solomon to clean up the federal supply service.

The federal supply service is responsible for providing federal workers with office supplies through stores that have been found by federal prosecutors in several cases to have ordered supplies they never received while kickbacks were paid to those GSA employes who ordered them. The supply service has continued to buy metal office furniture from Art Metal-USA Inc. of Newark, N.J., despite complaints that the furniture often is unusable.

Kelly, in an interview, said he found that no one knew how many pads of paper or metal desks GSA had in its 17 warehouses, because no one had taken an inventory in recent memory. And, Kelly said, several individuals were responsible for the same functions within the supply service.

Seven offices were responsible for the specifications that GSA uses when it orders items, for example, and 10 had charge of personnel matters, Kelly said.

"Responsibility was so fragmented that accountability was impossible to pinpoint," he said. "You'd ask who did something and you got different people pointing in different directions."

Kelly said the new organization will have only seven divisions in charge of functions like contracts and quality assurance, with checks and balances to make sure they are doing a good job.

In addition, he said, several departments will be transferred out of the federal supply service because they do not involve buying. Kelly said he also is studying why GSA appears to buy large quantities of certain items.

He said he has reduced from 2,900 to 2,200 the number of items offered federal employes in supply centers. Among the items dropped are leather briefcases, drafting sets and book ends.