THE LATEST development in the continuing saga of PACE (the Professional and Administrative Career Entrance examination) is the announcement by Attorney General William French Smith that the Government has negotiated a new consent decree with plaintiffs alleging that the examination discriminated against black and Hispanic applicants for federal professional jobs.

The compromise leaves intact the basic outlines of the earlier agreement negotiated by the Carter administration. The PAGE examination would still be phased out, and new examining procedures would be tailored to each of the 11, job categories now covered by PACE. If the new procedures failed to result in the selection of about the same proportions of blacks, whites and Hispanics as had applied for the jobs, agencies could either try a new exam or attempt to convince the courts that the examining procedures were, in fact, "job-related." As we noted yesterday, establishing that a test is "job-related" -- that is, an excellent predictor of subsequent performance on the job -- is, under the currently used guidelines, almost impossible.

What the Reagan administration gained in the compromise was a considerable reduction in the period during which agencies must employ extraordinary procedures to ensure that PACE jobs are filled in proportion to the racial distribution of applicants.

During this period -- which under the earlier agreement could have extended for nine years but now will be restricted to three -- agencies could not even attempt to show that their selection methods were job-related if the required proportions of minorities were not being appointed to jobs.

For their part, plaintiffs won the elimination of the "escape clause" provision that allowed agencies to stop adjusting their selection procedures for a particular type of job if 20 percent of the jobholders in that category were already black and Hispanic. Some agencies have already exceeded this goal. Now they may have to modify their screening procedures.

Possibly the most importand new provision is one that opens up the possibility that the administration may try to make it easier for agencies to establish that a test is job-related. This could be done by modifying the internal government guidelines that now control such matters. The revised agreement makes it explicit that any such changes, or any new court interpretations of the Civil Rights Act, would immediately change the operation of the consent decree.

Since it was by no means clear that the new administration could unilaterally withdraw from the agreement signed by its predecessor, this is probably the best compromise that could be gotten. But it leaves untoched the basic question: How can affirmative action goals be met in a way that is consistent with general notions of fairness, with the requirements of a merit-based tenured civil service and with the increasing need for a well-trained, highly motivated professional bureaucracy?