Kevin Grevey and the Bullets are involved in a puzzling contract dispute that is keeping the veteran guard from reporting to training camp.

The only thing clear is that one of the parties is not telling the truth.

Grevey presented the Bullets with a four-year, $1.5 million offer sheet from the Indiana Pacers last month. Under the National Basketball Association's right of first refusal, the Bullets matched the offer and, therefore, retained Grevey for the terms offered by Indiana.

The Bullets insist Grevey hasn't signed a contract. Grevey's attorney, Scott Lang, said Grevey has signed, and it is the Bullets who haven't signed it.

"Kevin signed the contract Monday and is ready to come to camp," Lang said. "The contract is with the Bullet attorneys now. There is a dispute over the contract format and we're trying to find a common ground so Kevin can come to camp.

"I'm satisfied the Bullets have matched all of the principal terms of the Indiana offer sheet, including the Indianapolis 500 tickets, but there is a problem with the format of the contract," Lang said. "I can't say anything else about it, but Kevin is ready to play and I hope this whole thing will be resolved in the next few days."

Bullet General Manager Bob Ferry said he is waiting only for Grevey to sign the contract. "We've matched the offer in its entirety," he said.

The Bullets received good news yesterday on No. 1 draft choice Frank Johnson after his visit to team internist Dr. Herbert Singer.

Singer said Johnson's high blood pressure, which has kept him from practicing, is coming down and he has has responded well to medication.

Johnson will be examined again Friday and Singer said he could begin playing soon.

Bill Pollak, Johnson's attorney, said Johnson is shooting on his own and feels fine.

"He never felt any discomfort and we've been assured this thing won't have any effect on his basketball career," Pollak said.

Ferry said that while he is pleased with the progress of the team he still is looking for available free agents. The most notable free agents available are Bob McAdoo, John Lucas, Ray Williams, Paul Westphal and Phil Smith . . . The Bullets' right of first refusal on free agent Bobby Dandridge will expire Oct. 11 . . . The Bullets will play an intrasquad game at 2 p.m. Saturday at Dunbar High School.