The horse-drawn caisson wound slowly through Arlington National Cemetery and stopped in front of lot No. 59, the section reserved for victims of terrorist acts.

The flag-draped casket of William L. Stanford, one of the two Agency for International Development auditors killed by plane hijackers in Iran almost two weeks ago, was carried to the gravesite yesterday afternoon amid full military honors. Three volleys of rifle fire pierced the unusually warm December air as scores of family, friends and colleagues lowered their heads and wept.

Stanford, 52, was killed as he was traveling back to his wife, Lorraine, and his 13-year old daughter Patricia, in Karachi, Pakistan, where he intended to spend the holidays. He had been stationed in Karachi for almost three years, but he formerly lived in Annandale and his three grown children live in Virginia.

"You don't negotiate with terrorists," said John Kindice, his voice cracking as he delivered Stanford's eulogy at a memorial service that preceded the burial. Kindice, an AID inspector general continued, "That is what Bill said after a close friend was killed in Lebanon last year."

Stanford's burial in Arlington, a cemetery usually reserved for those killed on active military duty, was authorized after the family made a special request to President Reagan. Stanford, who had worked for the U.S. foreign aid agency for the last 23 years, lies alongside American serviceman killed in the October 1983 U.S. barracks bombing in Beirut.

In a separate ceremony earlier in the day, Charles F. Hegna, 52, of Sterling, Va., the second AID official killed aboard the Kuwaiti airliner, was honored in a memorial service at the Fort Myer Chapel at the edge of the cemetery. Hegna's ashes will be interred in the cemetery's columbarium on Wednesday.

Among the AID officials who attended both ceremonies was Charles Kapar, one of the Americans aboard the hijacked jet who returned safely after the six-day siege at Tehran airport. His eyes blood-shot, and looking worn from the ordeal that began on Dec. 4, he said only, "They were two fine gentlemen . . . . We are going to miss them."

Kapar returned to the United States last week after Iranian officials stormed the airliner and overpowered the four hijackers. U.S. officials have linked the hijackers, who demanded the release of 17 terrorists convicted and jailed for the bombing of the U.S. Embassy, the French Embassy and other targets in Kuwait on Dec. 12, 1983, with a radical Shiite group.

M. Peter McPherson, the administrator of AID, handed the folded American flag from Stanford's casket, to his widow at the gravesite yesterday. Stanford's three grown children -- Laurence, 27, of Alexandria; Susan Stoney, 23, of Williamsburg, Va., and Paul, 22, of Fairfax -- clasped hands as they stood nearby.

Both slain AID officials had done extensive traveling for their agency, but because of the administrative nature of their job, both families told reporters that they did not worry too much about their safety.

Edwena Hegna said the family had just moved into a new home and that she was busy planning a Christmas homecoming for her husband when she learned he had been killed. Her four children -- Steven, 26, Craig, 24, Lynn, 21, and Paul, 17 -- filled the front row of the jammed chapel yesterday as a Lutheran minister spoke of their father.

"I doubt that Charles ever saw himself as being a great cog in the scheme of things," the Rev. Ivan Ives said. "And yet suddenly, he is thrust forward in the center of a grim struggle."