For eight years, Robert Kalmin was the chief financial manager of the Navy's Trident submarine construction program, charged with ensuring that billions of dollars worth of government contracts were properly spent.

But after he began questioning some contract expenses and procedures, he contends that the Navy took away most of his duties, segregated him from other employes, told him to see a psychiatrist and switched him to a job in which he spends most of his days punching numbers into a computer.

Now Kalmin is asking a federal court to force the Navy to turn over its documents on his case -- a case that has attracted the attention of the American Civil Liberties Union, Ralph Nader's Public Citizen Litigation Group and the Project on Military Procurement.

At issue, according to the groups, is whether the Navy can use what they see as a loophole in the public-disclosure laws to avoid turning over certain documents about Kalmin. They say the case could set a precedent for whether agencies will be able to maintain secret files on employes by taking advantage of exemptions under the Privacy Act and the Freedom of Information Act.

"If the Navy wins this case," said Alan Adler, legislative counsel for the ACLU's Center for National Security Studies, "it will mean that federal employes in the future will be subject to transfers and demotions without even being able to get access to the documents."

To Justice Department and Navy officials, the fight to keep the documents secret is just as important. "What is a personal file and what is an agency record?" asked Royce C. Lamberth, chief of the civil division of the U.S. Attorney's office here. "It's not an easy line to draw when a document is inside a government office. Just because you have a piece of paper on your desk doesn't make it a government paper."

The Freedom of Information Act was designed primarily to give citizens access to general government information. The Privacy Act was intended to prohibit the government from misusing information about an individual that the person might not know exists. Under the law, citizens were supposed to be given access to the files that the government keeps on them.

But in writing the Privacy Act, Congress exempted files that were not part of a records system or were not specifically labeled with a person's name. The idea was to prevent people from going on "fishing expeditions" and asking agencies to turn over every piece of paper that included their name. Internal agency memos and personal notes also were excluded so supervisers would feel free to write candidly about their employes.

The Navy, in its court documents, contends that under the Privacy Act, Kalmin is not entitled to see 27 specific documents about him because they are not part of the agency's normal records system and are kept in files not specifically labeled with his name.

The Navy also contends that Kalmin has no right to see the documents under the Freedom of Information Act because they were all written before a decision was made. Also, claiming another exemption under that act, the Navy says the authors of some of the notes are entitled to their privacy.

The Supreme Court touched on the issue when it ruled that some papers and transcripts of tapes in the office of former secretary of state Henry A. Kissinger were his private property, and not official government documents.

The Office of Management and Budget also issued guidelines in 1979 that said the Privacy Act is limited to documents "under the control of an agency." The Navy, in court documents, is arguing that some Kalmin documents "are not under the Navy's control" and may be discarded when the authors want to.

Between the exemptions is a gray area. Suppose there is a "working file" on an employe, but it contains only inner-office memos and is not labeled with the employe's name? The Navy argues that such a file is technically exempt from both public-disclosure laws.

But Kalmin argues that the file should not be exempt, because the Navy made key decisions about his career based on those notes. Lamberth rejects that argument, saying that many of the notes were only "memory joggers" for Kalmin's supervisors and that the real decisions were based on the official documents the Navy has already turned over to Kalmin.

Kalmin, however, argues that the exempted documents had an impact. "Based on those documents, I've been told that I can't be a supervisor anymore," he said. "I think my character has been defamed."

A larger question is whether agencies can deliberately keep employe files informal to avoid the public-disclosure laws.

From court documents, it appears that Kalmin was the subject of wide discussions among many Navy employes, including his co-workers and supervisors. According to the Navy, the 27 documents include memos sent by co-workers to superiors, notes taken by one superior who talked to Kalmin's psychologist, and notes from telephone conversations during which Kalmin's eventual transfer was discussed. Also included is an 18-page factfinder's report to a Navy admiral, issued after Kalmin filed a grievance in 1982.

Eric Glitzenstein, of the Nader group, said, "What the government is saying is that by simply not placing very personal information in a file called 'Personal Information on Mr. So-and-So,' they are somehow exempt from the Privacy Act."

"His job was taken away informally," said Edna Earle Johnson, Kalmin's attorney. "The interesting thing about this case, from a privacy standpoint, is that the government has held all of the information in unlabeled files. They said none of those files had his name on them, so the Privacy Act is inapplicable."

She added, "If they can keep unlabeled files on individuals, outside of the privacy law, and then make decisions based on those files, then what's the point of the privacy law?"

But Lamberth contends that if the papers are "working files," it should not matter how they were used. "I don't think the courts should get into . . . how the records were used. Otherwise, you'd have a minitrial in every case."

Lamberth said supervisors will continue to keep personal notes about employes, if only to protect themselves in case employes accuse them of violating their rights. For example, Lamberth said that after he reprimanded a secretary recently, he immediately jotted down some notes describing the incident in case the employe later accuses him of discrimination.

"These are not easy questions," he said. "You really have to look at what rights individual employes have as managers and supervisors. It shouldn't reach the stage where managers have to take all their notes home with them at night."