A highly unusual and controversial proposal under consideration by a city agency would eliminate a large number of local ethnic groups from eligibility for lucrative minority contracts with the District of Columbia government.

The proposal, by the staff of the Minority Business Opportunity Commission, would eliminate from minority status all Hispanics born in Europe and South and Central America, leaving only those Hispancis born in Mexico or Puerto Rico eligible for the contracts.

The proposal also would eliminate from minority status persons born in Vietnam, india, China, Korea and Africa.

Four major local Hispanic-owned companies have won a total of more than $20 million worth of the city's minority contracts in the last year. This represent 40 percent of the entire minority share of the local market.

The recommendation requires the approval of the commission and Mayor Marion Barry. One commission member, Peter Taylor, said he supports the change.

"Lots of people here are coming in with bags of money from Vietnam and other places and buying up corporations," Taylor said. "They are . . . killing the little guy."

Four other commission members could not be reached for comment yesterday. Barry said through a press aide that he is waiting for a report from the commission. "Once we've reviewed [the report] we will be making some decisions," the mayor was quoted as saying.

The proposed changes are contained in a written draft being prepared by the commission staff. It is being put in final form for the commissioners.

A commission staff member said the proposed shift in guidelines to part of an effort by the commission to increase the number of city contracts going to blacks and "disadvantaged minorities."

"We just want to make sure that [black] who were supposed to benefit get their fair share," the staff member said.

A staff member who helped draft the propsed guidelines said individual companies owned by minority applicants will be considered on the merits "whether or not [the company] was historically disadvantaged in the United States before a final decision on certification is made.

The proposed changes come after a six-week review of the commission's operations by Courtland Cox, staff director of the commission, and his staff.

The proposed change is not without precedent in federal minority programs. Congress recently dropped Asian Americans from the federal Small Business Administration program for minority contracting.

"Oh, my God," one influential Hispanic leader with ties to the Barry administration said when informed of the staff proposal. "If Marion agrees to do something like that, then it's really going to be a political war between Hispanics and blacks, and that would be terrible.

Carlos Rosario, acting director of the Office of Latino Affairs for the District, said he was not familiar with the proposal. But, he said, "I don't see why if they have Spanish heritage why they lose their [eligibility for minority contracts]. If they are born minorities, they should have the same breaks as others.

"I've been working in the District of Columbia for 20 years," said Joe Rodrigues, who was born in Argentina and is co-owner of a major Hispanic company that does minority business with the District. "To be Rodrigues or black is the same thing. If there is [a minority program] in this country for blacks, it should be for Spanish people.

Rodrigues and his brother Francisco own Fort Myer Construction Corp. in Arlington, which he said does more than $3 million in minority business with the city. He said his business also does another $1.5 million in the regular competitive market.

Another major Hispanic corporation, Roubin and Janiro Inc., also would be affected by the proposed change in guidelines.

Angel Roubin, who was born in Spain, said: "It appears to me that if the city take that position, they are trying to discriminate against other minoriies."

In support of the proposed change, Col. Milton Carey, president of Associated Minority Contractors of America, a District-based national organization representing primarily black contractors, said: "There are Spanish who have culturally lived as white persons all their lives and in recent years found it profitable to consider themselves minority to take advantage of business in the minority community.

"They are bringing in superior resources to bear so they are more competitive in the sheltered market."

The key question, Carey said, is, "Have you been culturally disadvantaged in the United States. Have you been forced to live in a cultural bag? If the answer is yes, I say welcome."

The original guidelines are spelled out in a 1976 D.C. law that entitles local minorities to 25 percent of the city's contracting dollars. The law stipulates that minorities must be certified as such by the commission. Once certified, minorities only compete with minority firms when bidding on District contracts.

Commission staff members said the proposed changes in guidelines followed complaints by black contractors tha many of those who were originally certified by the commission came from aristocratic classes of foreign countries.

Another staff member said, "We were being besieged by applications from all over the world and we had to dd something about it." CAPTION: Picture, JOSE RODRIGUES . . . "Rodrigues or black is the same"