Inspector General Richard P. Kusserow has sided with Health and Human Services Secretary Otis R. Bowen in the dispute over extension of two Family Planning Act grants that led to the July 2 firing of abortion foe Jo Ann Gasper.

Kusserow, after an investigation requested by Sen. Gordon J. Humphrey (R-N.H.), a Gasper supporter, has notified Humphrey in a six-page letter that the department acted lawfully in extending two training grants totaling about $300,000 to Planned Parenthood Federation of America and its Wisconsin affiliate.

Gasper, who was deputy assistant secretary for population affairs, had said it would be "unlawful" for her to extend the grants, because the two groups' advocacy of abortion raised questions about their eligibility.

Bowen fired Gasper for "insubordination" after she refused orders from him and her boss, Assistant Secretary for Health Robert E. Windom, to extend the grants.

Kusserow, appointed by the president and confirmed by the Senate, is an independent official not subject to Bowen's supervision or control.

In his letter, a copy of which was obtained by The Washington Post, Kusserow told Humphrey that he had "found no basis to disagree with the legal conclusions of the Office of General Counsel" of HHS that "a refusal to extend grant awards, based solely on an undocumented assessment that the prospective grantees were advocacy organizations . . . would be subject to attack on a number of diverse legal grounds and would likely not survive judicial review."

Under the Family Planning Act of 1970, federal grants to family planning clinics may not be used to perform or advocate abortion, but an organization receiving the federal funds is not forbidden to use its own funds separately for performing or advocating abortions. However, under grant rules, funds can be withheld if the organization's outside advocacy seems to be translating into misuse of the government funds.

Gasper, in various statements and letters, said she declined to renew the training grants to the two Planned Parenthood groups because of "concerns relating to their advocacy of abortion," and "I advised Dr. Windom that I could not 'in good conscience' extend the two Planned Parenthood grants, that to do so would not be lawful."

Kusserow said investigations of Wisconsin Planned Parenthood in 1982 "failed to disclose any instance in which the grantee had violated the abortion restriction . . . {and} also did not find that this grantee had engaged in unlawful lobbying {for abortion or otherwise} using federal funds."

Kusserow indicated he concurred with the general counsel's view that a refusal to extend a grant "based exclusively on the

grantee's privately funded conduct raises constitutional questions under the recent Supreme Court case of Babbitt v. Planned Parenthood" and that "without underlying evidence of violations . . . it is likely that a court would find the department's refusal

to extend the grants arbitrary and capricious."

Kusserow said, however, that "there are inconsistencies and other serious flaws and weaknesses in the . . . policy pertaining to advocacy organizations." He recommended that the policy rules be "revised, clarified and strengthened."

For example, he said, one section of the department rules says that restrictions are not intended to "limit in any way the eligibility of advocacy organizations to receive grants," but another says that "the option of not awarding the grant should be carefully considered" if the advocacy "involves the strong likelihood that grant funds may be misused."

The inspector general said some clear way to reconcile these and other contradictory statements in the rules must be developed.