ashington Group International, among the nation's largest construction companies, said yesterday that it might seek bankruptcy protection if the Raytheon Company did not refund a portion of the price that Washington paid for Raytheon's building and engineering unit.

Washington said that since the acquisition it had faced about $700 million in unexpected losses because of cost overruns on some contracts, lower-than-expected profits on others and other liabilities, creating a cash-flow crisis and putting it in default of debt agreements. The company, once known as Morrison Knudsen, is considering selling assets, adding debt or issuing more shares, but it has lost substantial credibility on Wall Street. Its shares fell $6.35, or 79 percent, to $1.65 yesterday.

Raytheon said it did not believe that it would owe a refund.

The dispute involves Raytheon Engineers and Constructors International, a specialist in power plant construction that reported revenue of $2.7 billion in 1999. Washington paid $53 million in cash for the unit and assumed $450 million in debt.

Now the company, which has delayed reporting its financial results, said that its outside accountants recommended seeking at least $400 million in cash from Raytheon because it guaranteed the performance of certain construction contracts that the unit had signed before the deal, a Washington spokesman said.

Raytheon said it could not determine whether it owed a refund until Washington provided an itemized account of its unexpected costs, said David Polk, a Raytheon spokesman. Washington said, however, that it had already sent Raytheon that information. "Why would we delay this?" asked Brent Brandon, the company spokesman. "This is money back to us."

Mr. Brandon said the deal was initially attractive because the power industry was on the verge of the current boom. He said Washington was denied the access it wanted for a detailed examination of the Raytheon unit's finances, but it moved quickly to complete the deal because it believed the unit's employees were leaving.

Given that, he said, "it was important that we reserved the right to adjust the purchase price."

But Raytheon said that Washington was given full access to all construction projects for 10 months. After that process, Raytheon agreed to retain responsibility for four large projects Washington deemed risky.

"It may be that W.G.I. bit off more than it could chew, but we certainly aren't responsible for any failure by W.G.I. to manage projects properly after closing," Thomas D. Hyde, Raytheon's general counsel, said.

Dennis R. Washington, the chairman of the Washington Group, has built his reputation and fortune acquiring troubled companies, first with a privately held business. Through the 1990's, Mr. Washington expanded the former Morrison Knudsen in an industry where mergers are uncommon because companies are reluctant to acquire contract backlogs. The terms of the deal between Washington and Raytheon did not include a breakup fee.