The Defense Department's preparations for war and ability to fight are seriously hampered by interservice rivalry, poor Pentagon management and congressional nitpicking, and a major overhaul is needed, according to a Senate report released yesterday.

The study, billed as the most detailed critique of the Defense Department since it was established in 1949, urges replacement of the Joint Chiefs of Staff with a more independent council of senior military advisers. It also advocates reorganization of the Pentagon and strengthening of theater commanders stationed abroad.

The 645-page report, citing 34 major flaws that allegedly compromise military efficiency, faults the Joint Chiefs for loyalty to individual services rather than the common good of national defense. The office of the secretary of defense has historically failed to focus adequately on important strategic issues and theater commanders overseas lack the authority to enforce cooperation between the various forces within their units, the study adds.

As evidence of the need for change, the study discloses "major deficiencies" in the 1983 U.S. invasion of Grenada where American troops were short of vital supplies and the Army and Navy were unable to coordinate attacks because of incompatible communications systems.

"In a more serious fight against a stronger and more sophisticated enemy, these organizational failures could prove disastrous," the report warns.

Two years in preparation by the bipartisan staff of the Senate Armed Services Committee -- a supporter of the status quo in the Defense Department -- the report launches the most comprehensive effort by Congress in almost 30 years to revise the way the Pentagon spends money and prepares for battle. The committee's demand for reform indicates how widespread discontent has become with the structure of the U.S. military.

Behind the campaign stand two of the Senate's most influential military experts -- Sen. Barry Goldwater (R-Ariz.), the committee's chairman, and Sen. Sam Nunn (D-Ga.), the committee's senior Democrat -- who unveiled the report at a packed hearing and said they hope it will form the basis of legislation next year.

Sen. John W. Warner (R-Va.), a committee member and a former Navy secretary, signaled that the type of drastic reorganization envisioned by the report will not be achieved without a fight despite the backing of such powerful sponsors as Goldwater and Nunn.

"I disagree with the bluntness of your statements that this system is broke," Warner said. "It's not broken."

The Defense Department disparaged the report's critical tone in light of last week's interception by Navy F14 jet fighters of an Egyptian commercial jet carrying four Palestinians suspected of hijacking an Italian cruise ship.

"These kind of conclusions without the data to back them up don't match up with our recent experience where we had a military mission assigned by the president on very short notice to our military forces, which was carried out with skill, excellence, flawlessly," Pentagon spokesman Robert B. Sims said Tuesday.

Heading the list of problems pinpointed by the report is the Joint Chiefs, which includes the military chiefs of the Army, Navy and Air Force, and the Marine commandant and a chairman. Collectively, they are supposed to serve as principal military adviser to the president, the defense secretary and the National Security Council.

The chiefs, however, give "undue emphasis" to the interests of their own services, the report said, and they generally seek compromises acceptable to each service rather than objective analyses of an issue.

Failures by the chiefs to provide useful and timely advice, according to the study, "has had a serious impact on the ability of the Defense Department to prepare for and conduct military operations in times of crisis."

To correct this, the report suggests disbanding the Joint Chiefs of Staff. In its place would be established a Joint Military Advisory Council, made up of a chairman and four-star military officer from each service on his last tour of duty before retirement.

The council would focus exclusively on joint military activities, with service chiefs responsible only for the business of their services, according to the plan.

Military infighting is also blamed for hampering the work of six theater commanders, who head U.S. forces of two or more services scattered around the world. The commanders lack the power, the report said, to assure cooperation in times of crisis from the different services within each command.

"In sum, the United States does not have major combatant commands that can provide effective unified action across the spectrum of military missions," the study said.

This was most evident in Grenada where Army forces on the ground were unable to speak to Navy ships offshore to request and coordinate naval gunfire because of different radio equipment, the report said. Cut off from Navy communications, the Army never received a message giving the location of 224 endangered American college students who finally alerted the soliders by calling them on a telephone, the study said.

In Washington, the defense secretary has to fend off competing interests of the services in planning his budget and developing weapons systems, the report said.

As a result, the Defense Department fails to develop a coherent military strategy, the report said.

Part of the Pentagon's problems stems from congressional preoccupation with the minute details of defense spending, the report said. This "micromanagement" brings out differences between the services while requiring defense officials to spend enormous amounts of time testifying at hearings and responding to congressional requests, the report said.

The study suggests that Congress provide broad guidance for the nation's defense and restrict itself to close scrutiny of the defense budget once every two years rather than annually.