The General Accounting Office criticized the Justice Department Saturday for lax handling of defense procurement fraud cases, saying the department didn't know the status of all the cases and lacks a clear, written plan for handling them.

In a report released Saturday, the congressional watchdog agency focused on the management style in the Justice Department's 6-year-old Defense Procurement Fraud Unit and concluded that its "overall management . . . could be improved."A Justice Department official, asked to comment on the report, blamed Congress for skimping on funds for prosecuting contract fraud cases.

The study, undertaken months before the current investigation of defense contract fraud, said the department's apparatus for tracking fraud cases - the Fraud and Corruption Tracking system, or FACT - was ineffective because 42 percent of the cases referred to Justice were still pending, even though some of the referrals were more than a year old.

Justice Department prosecutors and agents are routinely asked to investigate fraud tips and to report the status of those cases to Washington but often fail to report back, the GAO said. For the 680 defense-related fraud referrals the department handled from 1983 to 1987, the Justice Department was unsure of the status on 286, the report said.

But Deputy Assistant Attorney General Victoria Toensing said Congress has not given the department enough money to do everything needed on such cases. Only "in a perfect world," she said, would Justice be able to track and prosecute all of its cases.

"But I don't think there is enough money printed in the United States to prosecute all the cases we should. We're underfunded, and that is directly related to the GAO's complaints," she said. "Our people have to decide whether they are going to do paperwork or whether they're going to prosecute, and I think they've made the right decisions."

The report is based on 10 months of GAO interviews with Justice Department officials in Washington and around the country. It was requested by Sens. Charles E. Grassley, R-Iowa, and Sen. William Proxmire, D-Wis., who released it Saturday. Two weeks ago, Grassley charged that Justice was bungling defense fraud cases, which he said were better handled by U.S. attorneys outside of the department's central office.

The GAO report said the Justice Department didn't keep track of the number of people working on defense-related fraud cases or how much money it had spent on defense fraud efforts. It concludes that because the department doesn't "know the overall status of (its) defense fraud work load or the amount of resources being spent in this area, we believe that the need for written management plans is even more critical."

"The Justice Department's lackadaisical, careless, hands-off management goes far to explain why the government is losing the war against defense fraud," Grassley and Proxmire said in a joint statement. "If any major private law firm handled its affairs the way Justice handles the defense fraud program it would be out of business within a year."

Toensing retorted that Grassley "ought to put his money where his mouth is" and work to increase Justice Department funding.