When the D.C. Receiving Home for Children needed painting in 1983, instead of requesting competitive bids from established painters, District officials awarded the $24,500 contract to a downtown clothier with no painting experience who promised to paint each room a different, vibrant color in line with a psychological theory that colors can act as a calming influence.

But the painters hired by the clothier applied only one coat to the walls, painted over keyholes and "put more paint on the floor than the walls," according to a supervisor at the home for troubled youngsters. Three months after the painters departed, a city crew was brought in to salvage the work, repainting the entire job at overtime wages.

"The city ended up paying twice," said the supervisor, who asked not to be identified. "It would be funny if there wasn't so much money involved."

A city official who was briefed on the case last year by the D.C. inspector general's office said investigators found that shortly after the contract was awarded, the clothier's firm, A.O. Latt Inc., paid $800 to Contemporary Design Inc.

The design company sold art and was a home business run by Daniel Wynn, a coordinator with the D.C. Youth Services Administration who was one of the city officials responsible for awarding the painting contract.

Wynn, who resigned last December during the inspector general's probe, could not be reached for comment. His District employment records have been subpoenaed by a federal grand jury that is investigating alleged contract abuses within the Youth Services Administration.

Alan Latt, president of A.O. Latt Inc. and an executive of Latt's Country Squire, said the children's home painting project was his firm's first effort outside the clothing business. He said he was unaware that District officials were dissatisfied with his work and had it redone.

"Frankly, we were interested in becoming involved in government contracts," he said. "I don't remember how we found out about that one."

Latt said he knew Wynn before the contract was awarded. "I don't remember what the connection was," he said, adding that "everything we did was above board . . . . I've been in business for 50 years. I'm the last person in the world who's going to play games."

Latt said that A.O. Latt Inc. no longer exists and that he did not pursue other city contracts.

Latt's attorney, Lawrence Schwartz, said he gave the D.C. auditor an itemized list of checks that Latt paid to Contemporary Design. Latt said he could not recall what he received from the design firm in return for the checks. "We write hundreds of checks a week," he said.

D.C. Auditor Otis Troupe could not be reached for comment.

The painting of the youth home by Latt Inc. was financed out of the budget of the D.C. Department of Human Services, which includes the Youth Services Administration, according to city documents. Youth Services administrator Patricia Quann, who resigned under pressure last week, made a special request for the $24,500. City records show that Latt's estimate for the work was $16,000, but that the contract was written for the higher amount.

The painting was guided by a special theory of color design, which included bright hues to create a soothing environment.

A District fact sheet on the painting contract described its "objective" in flowery terms: "The premise of urban life, in all its guises, still concern human beings. Unless a positive urban life environment is designed within the institutional setting to deal with the total reality of the human experience, it cannot effectively serve the needs of our institutionalized population."

The records of the painting contract note that Youth Services officials "made attempt to contact other vendors, none of which could implement project."

City workers who repainted the home did duplicate Latt's special color scheme, according to youth home employes. City officials could not say how much was spent in overtime wages for the repainting.

D.C. Social Services Commissioner Audrey Rowe, who oversees the Youth Services agency, said the painting contract is "outside of the scope of my responsibility."

Rowe said the contract and Wynn's involvement in it are under investigation by the inspector general's office. "We haven't gotten anything from it," she said. "There have been no issues or irregularities issued."

Neither Inspector General Vernon Gill nor the mayor's press secretary could be reached for comment. Reports of the inspector general are given to the mayor and have not been made public, despite frequent requests by District council members.

The U.S. General Accounting Office, the FBI and the U.S. attorney's office also are investigating contracts awarded by the D.C. youth agency.