June 16, 1988

LEAD: The Secretary of Defense outlined plans to expand the Pentagon's drug testing rules to companies doing business with the military. Page A16.

LEAD: ARMED with toy guns, children have played war games for years. And parents and psychologists continue to debate whether playing with war toys encourages violent behavior among youngsters, or inures them to the horrors of death and war.

LEAD: THE ECONOMY Military procurement officials may have accepted payoffs from contractors and their consultants in exchange for confidential information on Government contracts. The investigation into possible Pentagon bribes is focusing on the actions of officials in all four military services and on some of the biggest contractors, as well as on former Defense Department officials who became private consultants.

LEAD: Texaco's management and Carl C. Icahn, its challenger, hit the hustings yesterday in last-minute efforts to round up proxy votes in advance of the company's annual meeting tomorrow in Tulsa, Okla.

LEAD: After four months of protests, strikes and ethnic violence, the Armenian legislature today sided with demonstrators demanding annexation of the disputed Nagorno-Karabakh Autonomous Region.