The debate over civil service reform moved into a congressional arena yesterday, with the heads of the government's largest agencies testifying about the frustrations of trying to get things done under the present, outmoded system.

Joseph A. Califano, secretary of the Department of Health, Education and Welfare, with 145,000 employees, told a congressional committee that his lack of ability to move top managers around, to reward true merit or to fire incompetent workers in timely fashion, and other restrictions, are thwarting the purposes of government.

"There's nothing worse than having people in a job so long that the will of Congress becomes irrelevant to them," he said.

He referred to top executives who have "occupied their jobs for as many as 10 or more years" and feel they "own" their jobs.

Califano's testimony and questioning was the longest and scrappiest of the day in a crowded hearing room in the Cannon House Office Building. He was one of several officials who urged the House Civil Service committee yesterday to approve President Carter's complex and controversial package of proposals to overhaul the U.S. personnel system (civil service). Carter has termed the plan a "centerpiece" of his entire effort to reorganize the government.

The administration witnesses tried to focus on the need for improving the performance of the government. But members of the committee concentrated their questions on their concerns that the new plan would reduce the rights and privileges of federal employes, and that it might "politicize" the federal bureaucracy.

Committee members, many of whom have large federal employee constituencies, also pressed the administration witnesses on proposed cutbacks in the advantages given to veterans in federal hiring, and on the need for changes in the role of labor unions in handling employee grievances.

Urging more flexibility for managers, Califano offered as an example the poor performance of HEW's student loan program, "a program which for 10 years never sent a student a bill (for being) in default." This was but one of numerous examples, he said, of what happens when the rewards are the same no matter how well an employe performs.

In a discussion of firing mechanisms, when Gladys Spellman (D-Md.) noted that the existing regulations permit a manager to fire an incompetent within 30 days, Califano invited her to "spend three months in the personnel office at HEW and see how many incompetents you can get rid of in 30 days."

Califano and other witnesses maintained that because of the time it takes to fire someone, most managers prefer to "let that employe sit there and do nothing," while the managers spend their time getting their programs moving.

The administration plan will shorten the procedure for firing or declining employes, the officials said.

Rep William Clay (D-Mo.) called the Carter package "unduly management oriented" and said it "provides little in the way of employment protections." He emphasized that the plan would reduce some employe appeal steps.

Civil Service Chairman Alan K. Campbell observed that "the present civil service checks and controls have not proven effective in deterring deliberate efforts to undermine the integrity of the merit system." He told the committee "there are no absolute guarantees against politicization of any public employment system . . ."

Campbell and James McIntyre Jr., acting director of the Office of Management and Budget, maintained that the protections Carter is proposing would be more effective than those that now exist.

Under the new plan, they said, protections against political and other types of abuse of the merit system, include: an independent merit systems protection board and an independent special counsel with subpoena power to represent employe interests; spelling out illegal types of political abuse and increasing the penalties; limiting the number of political jobs to 10 percent of the top executives; setting aside certain jobs for career civil servants; and other, related steps.

Defense Secretary Harold Brown, whose department employs 1 million civilians, or nearly 40 percent of the federal civilian work force, testified in favor of, among other things, the Carter plan to cut back on the lifetime advantages given to nondisabled veterans in federal hiring and job retention.

Because of their current scope, these laws have retarded federal hiring of women and minorities "at the very time we are deminding equal opportunity hiring and promotion policies in private industry."

Though the administration maintains its proposals will increase benefits for the veterans who need them most - the disabled and the recently returned (Vietnam era) veterans - this part of the package is expected to attract the most concentrated opposition. Veterans groups and other opponents will testify in future hearings.

Meanwhile, yesterday, the head of an independent federal employe's union called a news conference to denounce Carter's proposals. Kenneth T. Lyons, head of the National Association of Government Workers (NAGW) said the plan "boils down to the destruction of the system" and would produce a system "predicted on personal favoritism and political patronage."

NAGW and two other independent unions have formed a coalition to oppose Carter's proposals. The three unions, the National Treasury Employees Union and the National Federation of Federal Employees, plus NAGW, together represent 350,000 federal workers, according to spokesmen.

The American Federation of Government Workers (AFGE), which has the backing of the AFL-CIO and is the largest federal employes union, has endorsed the Carter proposal, with "representatives," in exchange for improvements in its collective bargaining rights.