WE CALL YOUR ATTENTION to a letter on this page today from William R. Ford, director of the District Department of Employment Services. He claims there were "factual and interpretive errors" in an earlier editorial urging the city government to start systematically reviewing all grants the city bestows. We could point out that his letter in no way shows that the city has a policy or even a regular voluntary practice of auditing groups that receive its grants. But why not instead look at testimoney given to a House manpower and housing subcommittee a few days after Mr. Ford wrote that letter?

The testimoney disclosed that one group "monitored" -- we use the word advisedly -- by Mr. Ford's department spent $100,000 of a $400,000 grant for the likes of drinks, limousine trips and leasing a car. The group is the D.C. Institute for Careers in Tourism. Federal authorities are investigating the use of that money as well as the use of another $48,500 of the same grant paid to a company headed by the very people who ran the D.C. Institute. Interestingly, when the D.C. Institute's contract with the city ended as a result of job trainees' complaints that funds were being misused, Mr. Ford's department transferred the grant to -- you guessed it -- the D.C. Chamber of Commerce. The chamber grant was cancelled recently when its director, James L. Denson, came under investigation for misusing those grant funds.

In his letter, Mr. Ford contends that the city's grant procedure requires record-keeping by grant recipients under federal government mandate. He says comprehensive audits are performed on all groups that get grants from the city under the federal Comprehensive Employment and Training Act (CETA). True the federal government does require the District to keep financial records on how it disburses grant funds. But it does not require that people who receive grants from the city have any accounting system. On one type of federal grant, CETA grants, all receiving groups must have financial records that can be audited. But the Department of Employment Services, according to its own auditors, interprets that rule to cover only new groups. Established organizations, such as the chamber, do not systematically have their books checked.The alleged misuse of one grant, first by the D.C. Institute and then by the D.C. Chamber, tells the story.

Currently, more than a dozen city agencies separately handle hundreds of grants, and no single city agency has responsibility for review. One result is that the city has already overspent this fiscal year on grant programs; the District's depleted treasury must pick up the tab. The city needs to require audits for all of its grantees. It must take auditors out of the individual agencies and put them in one office, such as that of the D.C. Inspector General, which will have the independence to conduct aggressive audits.

The failure of the Department of Employment Services to handle grants properly is more than some bureaucratic problem. It touches real lives. It means that money meant to help unemployed persons by training or temporarily employing them is squandered. The people neglected can rightly become bitter as they watch their hopes for a better life wasted by incompetence. Mr. Ford can do more about this tragedy than to write a letter defending his department's current policies.