USA Telecommunications in Alexandria is an unusual firm. Almost all of its 50 workers and managers are retired from the telephone company but are working as contractors -- often for the telephone company.

This collection of highly skilled retirees is doing a booming business but is at the center of a dispute that is a key issue in the nationwide bargaining that starts tomorrow between AT&T and its labor unions.

The controversy arises because USA Telecommunications and similar firms often perform the type of work previously done by unionized phone company workers. The Communications Workers of America is pushing for a ban or limits on contracting by AT&T that the union says takes jobs from its members.

"We've had all the work we could handle," said USA Telecommunications President William L. Collins, a retired AT&T manager who started the company just before the 1984 breakup of "Ma Bell" and who said business has expanded by 60 percent since its first year.

His company installs and maintains the space age telecommunications and computer equipment sold by AT&T Information Systems, but it can perform the work "much more" cheaply than AT&T's installation charge, Collins said. Before divestiture, AT&T did all such work, but now it is a wide-open competitive field.

Part of the contractor's cost advantage, Collins said, is that the firm provides no health insurance or other such benefits to its mostly part-time work force. The reason is that Bell System retirees are still covered by health insurance and pension plans that were guaranteed when the workers took early retirements.

"It is very disturbing" that former union members are "undercutting their fellow employes and, in essence, taking jobs away," said CWA regional Vice President George Strick. "They take advantage of a reasonably good pension and health insurance we negotiated, and then they take work away from their brothers and sisters."

Strick said that telephone workers "were always screaming about the use of outside contractors," but he added that he believes that some of them have ended up doing such work themselves after retirement.

CWA threatened a strike last year over "contracting out" but reached an understanding with AT&T that contractors would not be used to cut jobs. AT&T spokesman Herbert Linnen said its use of such firms is "minimal" and should not be a major bargaining issue.

"CWA would like to do away with us, I suppose," Collins said, but he added that he believed that "there is enough work to go around."