The Office of Management and Budget is in the final stages of revising a Great Society policy that has required local governments in the same metropolitan area to talk to each other before they can get a federal grant.

The proposal, as outlined in a Mailgram to various interest groups, emphasizes federal agency coordination with state governments; local governments would play only if the states invited them. The participation of "special purpose planning organizations," such as those created, say, for health planning, would be discouraged.

According to several sources, the major change in the process, called A-95 after the OMB circular that spelled it out, would be a concession to "New Federalism": the individual state governments, not the feds, would set the rules for coordinating federal grants in metropolitan areas.

But despite OMB's intention of reducing confusion in the grant process, there is concern on Capitol Hill that the proposed change will actually be more complicated than A-95 because each governor will make his own rules rather than having OMB do it centrally.

A-95 is one of those insidey government terms that has come to represent, in the minds of many local governments, unwarranted federal intrusion. Some governors have also viewed it with alarm because it provided a city-based forum that seemed to eliminate the statehouse in discussions of where and how federal grants should be spent.

The full range of federal aid programs -- from sewers to highways to hospitals to housing -- are subject to A-95 review, and federal agencies are supposed to pay attention to the comments a regional planning group may have about a federally funded project.

Groups such as the Metropolitan Washington Council of Governments (COG) owe their early existence to the federal review requirements that the administration now wants to relax. In the past, some grant money went to support the regional planning process.

The present A-95 process, an OMB source said, "is detailed and descriptive and requires a lot of paperwork, with no distinction between important and unimportant projects. It is so weighty that state and local governments were not able to get good comments in, and the federal government agencies were not paying that much attention."

Local regional councils are not enthusiastic about the proposed changes, the source said, because "we have not specifically provided for regional councils . . . . It is just another layer of government that adds to the weightiness."

Walter A. Scheiber, executive director of the Washington COG and current president of the International City Management Association, said that "at this point most COGs across the country which are going to survive will do so with or without A-95 . . . . When A-95 was create it was extremely important to a number of COGs in putting them in a central position in the federal grant-in-aid pipeline . . . . If in the ensuing 16 years they have not succeeded in making themselves valuable to local governments on another basis, they probably are doomed anyway."

Deputy OMB Director Joseph Wright emphasized the state-oriented nature of the new proposal at a recent hearing by the Senate intergovernmental relations subcommittee, but said when questioned by Sen. David Durenberger (R-Minn.) that, if a state didn't set up its own review-and-comment process, there would have to be a way for local governments in that state to make themselves heard.

After the new executive order is issued, possibly in June, OMB will follow with guidelines to each department on how its grant-review regulations should read. One of the problems of A-95, all parties agree, is that each department imposes a somewhat different set of requirements on the regional groups.