LLOYD RICHARDS, artistic director of the O'Neill Theater Center, climbed onto the ampitheater stage. Behind him was a simple, white-topped table with some cratelike chairs.

"We spend very little time on the sets," Richards explained, welcoming the first Saturday evening audience of this summer's National Playwrights Conference, "because that would take time away from the playwright."

Nothing, one learns quickly, comes before the playwright at the O'Neill.

Right now, up at the center's compound in Waterford, Conn., in a setting reminiscent of summer camp - open fields, red wooden barns, a nearby beach, and plenty of friendly counselors - 12 extremely fortunate writers are in labor.

Attending them, free of commercial pressures, are stage midwives from every corner of the business. For four weeks they'll try to nudge the playwrights' creations toward a healthy and happy life in the theatrical world beyond. And they'll do it gladly.After 15 successful summers, the once experimental conference has become a sought-after theatrical experience.

A couple of hours before performance time, deeply-tanned New York director Tony Giodano stretched out alongside a trayful of dinner on the center's back lawn and summed up the center's aim: "At some point in the writing of a play the playwright needs to stop and get response to what is working and what is not."

Not far from Giodano, on the porch of the main house - everyone calls it "the mansion" - actors, playwrights, directors, critics, and off-duty impresarios mingled over the turkey, spilling onto the grass that slopes gently to a beach on Long Island Sound.

Like an intermission crowd, they drifted into small pockets of effervescent conversation, throwing off bursts of laughter and mimicked dialogue. According to Guy Gallo, editor of the O'Neill's summer newsletter, "Terry by Terry" - the evening's entertainment and work for the O'Neill crowd - had been "generating a lot of talk." That accounted for part of the electricity around the house, but the O'Neill dynamos-in-residence supplied the rest.

A selection committee appointed by Richards (who is also the new dean of Yale Drama School) chose "Terry by Terry" and 11 other stage plays from over 1,200 submissions. There is no application form to fill out, no biography required, and no short essay on why one would like to come to the O'Neill - just the play, thank you. "We're prey to anything," admits Giordano.

Since 1966, 142 playwrights have presented 195 new plays at the O'Neill. The roster includes many of the stellar names in current American playwrighting: Israel Horovits, Arthur Kopit, Lanford Wilson, Philip Hayes Dean, John Guare, Albert Innaurato, and Christopher Durang. As one New York actor put it, "plays at the O'Neill have a record of being picked up and produced commercially."

Committee members generally steer clear of well-established writers, and on rare occasions a play seems so "complete" that it is passed over. But those who are chosen "can repeat," says Richards, "when they've taken a step in growth."

The chosen few, however, have the wealth of O'Neill's resources at their disposal. Giordano, who has been directing at the O'Neill for over a decade, explains how the normal lines of authority in the commercial theater are redrawn: "If, in rehearsal, the cast and director think that something's wrong with a part of the play, and the playwright disagrees and thinks it's good, and wants to see it done, then it's done. Period."

Only the matter of rounding up personnel for the O'Neill productions lies outside the writer's control. Richards assigns all selected plays to a director who then auditions actors in New York.

"The method at the O'Neill," says New York actor Dan Hedaya, who spent a summer at the O'Neill a few years ago, "is that you don't pick up the script until you arrive.They discourage memorization. If one actor is with book and another is without, it interrupts the flow. It's too different styles completely. They want uniformity."

Back this summer for a one-week stint, Hedaya understands that little attention will be paid to his acting. For an actor, he says, the O'Neill offers a chance to mix with peers, survey exciting new properties, enjoy the "liberation of not having to learn new lines in a short time," and acquire a "prestigious credit."

"There are actors I know in New York," says Giordano, shaking his head, "who would never think of casting here - yet they are superb actors."

Mark Leib, seated beside Giordano, listens intently. Geib began writing "Terry by Terry" in November 1977 at Yale Drama School, where he'll be a third-year playwrighting student this fall.

"I applied because I thought the play could use the help and criticism," says Leib, a bearded 24-year-old Harvard graduate from the Tampa Times. Richards assigned Giordano to direct it.

"You're encouraged to work on the play all the time," says Leib. And in fact, some of the playwrights rewrite so extensively between the time their play is selected and the beginning of the conference that the results are barely recognizable.

Barbara Field, literary manager of the Guthrie Theater in Minneapolis, is an O'Neill playwright this summer for the second time. She admits to having done almost exactly that on her own play entitled "Pen."

"I must admit," she laughs, referring to Richards' response to her "refinished" product, "I noticed some bewilderment on Lloyd's face."

Each play receives two performances. A couple of days after the second performance, the playwright, director, dramaturgist and Richards meet with anyone who is interested - including any non-O'Neill residents who wish to participate for a 45-minute critique.

"It's not a lot," concedes Giordano, "but it's enough to get people's basic likes and dislikes. They don't get into precise technical structure. The writer is challenged to sift properly.

"I've warned playwrights not to take too seriously the criticisms they get here," adds Giordano. "I don't think anyone should have the final answer to his play but the playwright."

Also waiting for the "Terry by Terry" performance on the O'Neill back lawn were playwrights Kermit Frazier and Preston Ransone. Like Giordano, who holds an M.A. in theater from Catholic University, Frazier and Ransone have strong Washington area links and strong feelings about the O'Neill.

Frazier grew up in Washington, but has pursued his theater career in New York, where he is a member of the writer's unit conducted by Ed Bullins at Joseph Papp's Public Theater. His play, "Kernel of Sanity," had been staged for the second time on Saturday afternoon. He acknowledged that theater scouts at the O'Neill had expressed interest in it, though he added that "in the contract, you promise that you will not negotiate here."

Mark Gershman, at the O'Neill for a week to look at plays for the Mark Taper Forum in L.A., said that the rule is observed.

"You go up to the playwrights and tell them that you like their play. There's no discussion of details. It's good for the playwrights in that they get a sense of how much interest there is without having to talk money or rights immediately."

Ransone, unlike the others, was chosen to participate in the O'Neill's New Drama for Television project. Four playwrights who wish to develop their skills as television writers will have their scripts subjected to expert analysis. The television scripts are not publicly performed.

Ranson, 42, a former foreign service officer in Vietnam, rarely mixes with theater people. A resident of Severn, Md., he considers the O'Neill residency "a feast" and the Washington tehater scene something less: "The theaters there are dead," he charges. "Inaccessible. You can't even get a reading. You submit and 14 months later you get a response."

"Frankly, " he adds, "I don't care about the situation in Washington now. I'm busy writing for television and movies."

At 8:40 p.m., with the mist rolling into the amphitheater from Long Island Sound, the staged reading of "Terry by Terry" began.

On a pentagonal stage that looks like an excerpt from a boardwalk, 11 gutsy actors mined Lieb's story of a boy who refuses to talk for laugh after zany laugh. The music from Ocean Beach, a nearby resort, filtered in. A ship honked its foghorn in the distance. The mist turned to drizzle. Everything was dampened but the enthusiasm of the actors and crew.

As soon as the first act ended, they clambered up the amphitheater rows, grabbing chairs to be moved into the barn next door. Working swiftly, passing the chairs from hand to hand through the barn windows, they had the inside performance space ready before the audience returned from the snack bar.

There, where none of them had rehearsed, four different actors performed the wrenching exercise of revealing Terry, now a young writer, as a self-absorbed bully. Up on the wooden balcony overlooking stage left, Jason Robards, at the center that day to discuss plans for the centennial of O'Neill's birthday, hunched over the railing, thoroughly absorbed in the goings on beneath.

On Tuesday morning, in a building called the Barn-L, a hundred or so people sat around facing four men in chairs - Richards, Giordano, Leib and Michael Fengold, the Village Voice drama critic who served as dramaturgist for the production. Feingold made a statement about the production and then, for roughly 45 minutes, the crowd let the four men know what they thought about "Terry by Terry" by Leib.

"They loved the first act," says Giordano, summing up the reaction, but they had a hard time accepting the lack of sympathy for the character in the second."

"I had hoped it would be hotter," reported Leib, but he may yet have some heat in store for him.

"In the next few weeks," promises Giordano, "Mark will continually be hit with reactions. I have the feeling that "Terry by Terry" will be talked about for the whole conference."

That, of course, would suit Richards just fine. On July 1, he assumed his new position at Yale Drama. He will remain artistic director of the O'Neill. With his hands at the helm of two of the most powerful institutions for serious theater in the Northeast, Richards' influence on theater throughout the country should make itself felt in the next decade. He enjoys a certain reputation for eclecticism in his tastes, and in pretending to deny it, he confirms it.

"No, there is a type of theater that I want to encourage," he asserts. "Good theater! Theater with a sense of drama, theater that entertains, that makes people feel and think and know."

"We're all part of a developmental network," he says, referring to other repertory theaters and Joseph Papp's Public Theater in New York. "As Joe was saying [he had been to the O'Neill the day before], we do work that they don't. You meet people here that you can't get on the phone. Everyone up here is open, accessible and interested. We're not just interested in next year's hit play."

As Richards talks, his passion for the whole world of theater bubbles over. A small man with a sizable midsection and a beard now speckled with grey, he stirs the thought of a Santa Claus of theater. And when he talks of what makes him happiest at the O'Neill, the impression of generosity only deepens.

"When the light goes on for a playwright," he replies. "When he understands his play for himself. When he grows. Fails. Perceives his failure. It happens in small ways." CAPTION: Picture 1, Discussing a play on the lawn; Picture 2, Lloyd Richards on stage. By A. Vincent Scarano