General Manager Bob Ferry said yesterday that the Bullets are ready to sign free agent Mitch Kupchak, even though, according to league sources, he could be offered as much as $700,000 a season to play elsewhere.

Kupchak is vacationing in Acapulco. He has maintained the past few weeks that he wants to remain with the Bullets and money will not necessarily be the deciding factor in where he plays. He said he will listen to all offers, however.

The New York Knicks and Los Angeles Lakers, two of the NBA's biggest spenders, want Kupchak badly, and both teams have made it known they will do virtually anything to lure the 6-foot-10 forward-center away from the Bullets.

The $700,000 figure that is being bandied about is nearly twice as much as any Bullet has earned in a single season. Kupchak, 27 and never a regular starter in his five-year career with the Bullets, earned approximately $122,000 last season.

"We'll sit down soon with Mitch and his agent (Larry Fleisher)," Ferry said. "Our position is the same as it's always been. We intend to sign him.I know there's a lot of interest in him, but it's all speculation at this point. Mitch is worth more to us than he is to any other team and we're going to sign him.

"We feel the same way about Kevin Grevey," Ferry said of the 6-5 guard, who is also a free agent.

Ferry isn't so sure what to do with his third free agent, Bob Dandridge, who has been plagued by injuries the past two seasons. "No decision has been made one way or another on Bobby," Ferry said.

Greg Ballard would have become a free agent at the end of the upcoming season, but Ferry said he signed him recently for at least two more years.

There are currently 45 free agents in the first year of the league's no compensation/right of first refusal system.

"For the first time, some players are going to find out exactly what they're worth and some of them will be surprised," Ferry said.

Other than Kupchak, the most sought-after of the free agents are guard Otis Birdsong of Kansas City, center James Edwards of Indiana, forward Alex English of Denver, forward-center Steve Hawes of Atlanta, guard Ray Williams of New York, guard Paul Westphal of Seattle and forward Scott Wedman of Kansas City.

Here is how the right of first refusal works:

A veteran free agent was permitted to begin negotiating with new teams May 15, the day following the last game of the NBA championship series. If he receives an offer from a new team that he wishes to accept, the player and the new team must complete and sign an "offer sheet", which states the terms of their agreement.

After completing the offer sheet, the player must give a copy of it to his old team, which has 15 days from the date of receipt of the offer sheet to determine whether it wishes to match it. The free agent may present his old team with only one offer sheet.

If the team wants to keep the player and matches the new team's offer within the 15 days, the player must accept that offer. If the team doesn't match the offer, the player and the new team will be deemed to have entered into a binding contract.

A free agent may present his old team with an offer sheet at any time unless the team has offered the player a one-year contract. If the team has offered such a contract, the player has 165 days from May 15 to present an offer sheet, accept one one-year contract, or agree to another contract with his old team.

Ferry said the Bullets will most likely stay away from bidding on free agents and concentrate more on the June 9 draft.

"By any stretch of the imagination, I'm going to have a choice of Al King (Maryland forward), Herb Williams (Ohio State center), Rolando Blackman (Kansas State guard), Darnell Valentine (Kansas guard), Gene Banks (Duke forward) and Frank Johnson (Wake Forest guard)."

Ferry added that Indiana's Isiah Thomas and Maryland's Buck Williams, both undergraduate eligibles (formerly called hardships), are expected to be the first players selected, going to Dallas and Detroit.

The others expected to go before the Bullets pick are Mark Aguirre of De Paul, Orlando Woolridge of Notre Dame, Al Wood of North Carolina, Steve Johnson of Oregon State and Danny Vranes and Tom Chambers of Utah.