LEAD: The bidding for a $4.5 billion contract to build a telephone network for the Federal Government is being threatened by a sharp dispute about the dwindling number of qualified competitors.

Federal Phone Plan Is Disputed

LEAD: Fifteen years ago this summer, a night watchman found a piece of tape left by burglars on a door latch at the Watergate office building where the Democratic National Committee had its headquarters. Two years of intense

The Iran-Contra Thicket; Mysteries Remain in the Affair, Even as It Has Raised Vital Issues on Abuse of Power

LEAD: Twice a day, every day since July 9, friends, relatives and strangers have joined Karen and Kenneth Schweiger as they search the mosquito-infested swamps and woods of Staten Island for their 12-year-old handicapped daughter.

A Family Grieves As Many Search For Missing Girl

LEAD: After a slow start three months ago, the nation's amnesty program for illegal aliens is gaining momentum with more than 40,000 applications being filed each week, according to immigration and counseling officials around the nation.

AMNESTY PROGRAM FOR ILLEGAL ALIENS GAINING MOMENTUM

LEAD: Just outside New York City, suburban doctors and social workers are struggling not only to treat their AIDS patients, but also to find places for them to live, buses to take them on errands, and neighborhoods to welcome them home.

Suburbs Straining to Build Services for AIDS Victims

LEAD: The Mets ended a revival road trip today by beating the Montreal Expos, 7-4, and headed home with five victories in six games against the two teams in front of them in the National League's East.

Yanks Outslug Tigers, 8-5; Mets stop Expos, 7-4; Mood Upbeat After 5-1 Trip

LEAD: The bull market in stocks, which five years ago began a climb that is still breaking records, has changed the face of corporate America.

5-Year Stock Rally: The Far-Reaching Impact

LEAD: Down in Rhododendron Valley and up on Daffodil Hill, on Azalea Way and along the wooded shores of the Bronx River, an unusual census is under way at the New York Botanical Garden.

Life of Plants In the Bronx: Not So Secret

LEAD: While the violence involving Iranians and the Saudi police in Mecca has considerably raised already high tensions in the Persian Gulf, Reagan Administration officials said today that they plan no policy changes for the region.

U.S. WON'T CHANGE ITS POLICY IN GULF

LEAD: A senior Soviet arms negotiator said today that Moscow would consider a compromise to resolve differences over West Germany's short-range Pershing 1A missiles.

Moscow to Consider Compromise In Dispute With Bonn on Missiles

LEAD: A little more than a year after the insider trading scandal burst into the open, Government prosecutors are preparing for what could be the most decisive phase of this wrenching episode: trying their cases in court.

Insider-Trading Cases Entering Crucial Phase

LEAD: JOE COWLEY has not lost his sense of humor. He was standing in front of a stall in a $1 million barn on the Buckman Oak horse farm here one day last week when, sticking his left hand through the gate to pat the nose of Rare Topaze, the stall's majestic resident, he noted, ''One chomp and your fingers are gone.

COWLEY LOST HIS CONFIDENCE AND HIS SEASON, TOO

LEAD: The nation's economy continued to expand in July, and at a much faster rate than in June, according to a report to be released today by the National Association of Purchasing Management.

Strong July Seen by Purchasers

LEAD: While much of the debate over the banking bill has centered on such broad policy issues as the separation of commerce and banking, and the rescue of the thrift system, a host of smaller provisions that affect millions of individuals and thousands of banks and thrift units have found a place in the legislation.

Bank Bill's Narrower Provisions

LEAD: At 3:30 in the morning, next to a vast, dark graveyard, what is at once a decades-old routine and a fierce new battle for survival unfolds at the Tuscan Dairy Farms processing plant in Woodside, Queens.

Milk Industry In New York Is in Upheaval

LEAD: Iran, vowing to avenge the deaths of hundreds of Iranian pilgrims in a riot in Mecca, called today for the ''uprooting'' of the Saudi Arabian royal family, raising the specter of religious war in the already tense Persian Gulf region.

IRANIAN OFFICIALS URGE 'UPROOTING' OF SAUDI ROYALTY

LEAD: Members of the United Steelworkers union employed by the bankrupt LTV Corporation are voting this week on a contract that would restore supplemental pension benefits to about 8,000 early retirees. The proposed agreement has profound ramifications for the Federal agency that guarantees pension benefits.

Vote Starts on LTV Pact With Its Steelworkers

LEAD: It is likely to take more than 10 years for the five-theater performing arts center proposed by Governor Kean for downtown Newark to have an impact on redevelopment there, according to officials of other arts centers and those familiar with the Newark plan.

Impact of Newark Arts Center: Far Off

LEAD: The British press, banned by the nation's highest court from reporting the memoirs of a retired intelligence agent, resorted to mockery and traditional Fleet Street opportunism today.

British Press Does/Doesn't Obey Book Ban

LEAD: When a dozen partners in the Trammell Crow Company's Northwest region resigned to form their own company a few weeks ago, competitors wondered whether it was a sign of serious trouble at the nation's biggest real estate developer. After all, the departures marked the second major defection at the Dallas-based company this year: eight partners in its Chicago office decided to go their own way last February.

Booming Developer Tightens the Reins

LEAD: From United States Treasury bills and foreign currencies to choice real estate in New York City and Canada to stocks in several Western nations, Japan's asset-rich life insurance companies are venturing overseas, quickly becoming a force in world financial markets.

Japan Insurers Extend Abroad

LEAD: What finally persuaded Robert J. Kellner that he was not just imagining the problem was when he decided to count the lights instead of cursing the darkness.

Metro Matters; Stale Austerity: Unused Lights Darken Roads

INSIDE

BUSINESS DIGEST: MONDAY, AUGUST 3, 1987

LEAD: The scenes were typical. In one clubhouse, the players spoke with a kind of subdued confidence. In the other - the one where Sparky Anderson sat behind an empty desk and blew smoke from a pipe - it was quiet. Another day had passed.

METS STOP EXPOS, 7-4; RHODEN GETS 14th VICTORY

Kim Hyung-jun is a South Korean entertainer, lead rapper and youngest member of boyband SS501 and SS301.

Kim Hyung-jun, South Korean singer and dancer

Kim_Hyung-jun

Chris McQueen is a former England international rugby league footballer who plays as a second-row or loose forward for the Brisbane Tigers in the Queensland Cup.

August 3, 1987

Headlines from August 3, 1987

Federal Phone Plan Is Disputed

The Iran-Contra Thicket; Mysteries Remain in the Affair, Even as It Has Raised Vital Issues on Abuse of Power

A Family Grieves As Many Search For Missing Girl

AMNESTY PROGRAM FOR ILLEGAL ALIENS GAINING MOMENTUM

Suburbs Straining to Build Services for AIDS Victims

Billboard 200

Whitney

Bad Animals

Whitesnake

The Joshua Tree

Girls; Girls; Girls

Notable Births

Historical Context for August 3, 1987