THE DISTRICT GOVERNMENT has always been uneasy about its reputation for bad management, the more so because more than one federal audit has shown that local books haven't been as tidy as they might be. So it perhaps understandable - and even laudable - that some agencies and officials in the city should be a little tight with their money. But overspending or misspending is only one form of bad management. Underspending, at the expense of worthy recipients, is another.

A case in point is the management of the Special Crisis Intervention Program, established this year by Congress to give financial aid to elderly and poor persons who had unusually high utility costs last winter. The local Office of Emergency Preparedness had the responsibility for deciding who was eligible and then parceling out the $1 million in program funds. But it rejected more than 4,600 applicants - even though the bureaucrats in that office informally agreed that many who were rejected were actually eligible for as much as $250 in assistance.

The funds were not distributed because local bureaucrats wanted federal guidelines to tell them exactly who qualified for the assistance. But specific guideliness were not provided in the federal legislation, since Congress felt that each state should make its own decision about who was in need. So., in the absence of federal direction,local bureaucrats decided to play it safe by developing a very strict interpretation of who was eligible based on "dire financial need." And the result of that interpretation was that $400,000 in funds for the program went unspent. Thus a lot of people who could - and should - have been helped by the program lost out.

Now, there are any number of ways to indentify the appropriate recipients for federal funding - and in this instance, many of the states seemed to be able to find their own fair and legitimate way of doing so. One way would have been the creation of a sliding scale based on income and utility costs. Or it might have been possible to seek assistance from the White House Task Force on the District. But simply denying needed and available funds to qualified applicants out of fear of being audited is a gutless way to run a program. There is, as we said, more than one kind of bad management.