City Administrator Thomas Downs told a City Council panel yesterday that it will be about two years before the city can award contracts for a new telecommunications system, instead of seven months as previously believed.

Downs told the council's Committee on Government Operations that the contracting process that began last October had to be cancelled because the city's bid request -- called a "request for proposals" -- was inadequate and the bids submitted were "poor quality and unacceptable."

"We underestimated the complexity, the time and the issues involved," Downs said after the committee meeting.

Yesterday's meeting marked the first time that council members had questioned city officials about the telecommunications contracts since Jose Gutierrez, a former member of Mayor Marion Barry's cabinet, accused Downs of trying to pressure him into approving several controversial contracts. A central part of the dispute involved the Chesapeake & Potomac Telephone Company's attempts to win three city telephone contracts.

But City Council member William R. Spaulding (D-Ward 5), chairman of the committee, asked members to focus on details about the telecommunications system and not to discuss the allegations. Spaulding and council members Betty Ann Kane (D-At Large) and John Wilson (D-Ward 2) had earlier called for a council investigation of the allegations.

Spaulding said the controversy will be the subject of a hearing and that subpoenas would be issued for persons and documents if necessary. He said he will send a list of questions to the Barry administration.

Downs said the city has now uses 22,000 telephones and is trying to determine what type of overall telecommunications system is needed. He said the main issues include whether the city should use an internal or external telephone switching system; the impact the new system would have on C&P's ratepayers; and how it would affect city revenue and employment.

The mayor plans to appoint an eight to 12 member panel to study the city's telecommunications needs, and Downs said yesterday that the city should be in the position to award contracts by April 15, 1987.

Meanwhile, Downs said that William Johnson, who replaced Gutierrez as head of the Department of Administrative Services, will decide within a week whether the city can legally proceed to select a firm to install from 800 to 900 telephones in the new municipal office building at 14th and U streets NW.

The building is scheduled to open this summer. Johnson said a decision on a firm will have to be made within the next 30 to 45 days.