The chairman of the presidential commission on the loss of the Challenger has charged that NASA "almost covered up" evidence that would have grounded the space shuttle and described as "shocking" the transfer of two Morton Thiokol Inc. engineers who argued the night before the Jan. 28 disaster against launching the spacecraft.

In a closed-door hearing on May 2, the transcript of which was released yesterday, members of the panel angrily criticized the National Aeronautics and Space Administration and Thiokol officials for repeatedly ignoring clear-cut warnings about problems with the shuttle's solid rocket booster joints in the months before the flight.

That evidence, spelled out in memo after memo, was serious enough to prevent the shuttle from continuing to be launched, but NASA official Lawrence B. Mulloy routinely signed "waivers" permitting flights even though the problem was not fixed, the transcript shows.

It was during the closed-door hearing that the panel learned that Allan McDonald, a Thiokol rocket engineer who argued against launching the Challenger, only to be overruled by superiors, was stripped of his responsibilities and transferred to a lesser job after he testified about his objections, according to the transcript.

The transfer of McDonald into a job with no staff, along with the similar transfer of engineer Roger Boisjoly, who also argued against the launch, brought stinging criticism from presidential panel chairman and former secretary of state William P. Rogers. He suggested that Thiokol, the maker of the rocket boosters, was trying to intimidate witnesses before the commission by engaging in "retaliation."

"If their warnings had been heeded that day . . . we might never have had the accident," Rogers said, according to the panel transcript. "And to have something happen to him [McDonald] is shocking."

The panel was also so dismayed about what it views as inadequate testing of the joints that it is considering recommending numerous full-scale test firings of the boosters before shuttle flights are resumed. Such a requirement could significantly delay the resumption of shuttle launches, tentatively set for next spring, a commission source said yesterday.

Panel member Joseph Sutter, a vice president of Boeing Co., charged that NASA did not test the rocket "one one-hundredth of what you need to say the booster is safe" and relied on "a hell of a skimpy data base" in approving the joints for flight after engineers warned about potentially catastrophic defects.

"Before anything flies there ought to be five or 10 of these full-scale things shot off, and after you get about 10 of them that work right, then you can say you should fly again," Sutter said. "I am going to see that . . . there is going to be a lot of full-scale testing or something suitable to back it up, not these little dinky 10-inch tests."

NASA and commission officials have concluded that design defects in the rocket's joints combined with the impact of cold weather caused the accident that destroyed the Challenger spacecraft and killed its seven crew members.

The Washington Post reported May 3 that, starting in July of last year, Mulloy, the chief of the rocket program at NASA's Marshall Space Flight Center, signed six separate "waivers" permitting shuttle flights to continue even though he had previously designated the joints as a "launch constraint," meaning no flights were to take place until the problem was fixed.

Mulloy was transferred late Friday from his job as head of the rocket booster project to a newly created post as assistant to the director of science and engineering at Marshall. The new position has no defined responsibilities.

The more than 300 pages of transcript and accompanying documents released yesterday paint the most detailed picture yet showing that the space agency and Thiokol were long aware that the rocket booster joints were seriously flawed and that the rubbery O-rings that are supposed to seal the joints had eroded during numerous shuttle flights.

But, the documents show, efforts to correct the problem were plagued by inattention from top NASA and company officials, procedural breakdowns, and what Rogers called at one point a "total lack of coordination between Marshall and Thiokol."

O-ring erosion -- a condition where hot gases "blow" through the seal and eat it away -- occurred on seven shuttle flights, the documents show. The problems were serious enough that in August 1985, Mulloy put a "launch constraint" on all future shuttle flights. Yet on Jan. 23, five days before the Challenger was due to be launched, a NASA team studying the O-rings concluded that "this problem is considered closed," an assessment that Mulloy testified was a mistake.

"Wasn't there any time in this history of the flight that you or anybody else connected with the solid rocket booster said . . . 'We are getting things that are outside our original predictions and shouldn't we take a look at it and stop flying until we've fixed it'?" asked commission member Robert Hotz.

Mulloy replied: "We continually emphasized to the contractor that we need to put more emphasis on resolving this problem. We did not recommend that we stop flying."

That Thiokol officials also paid little heed to the warnings was highlighted on Oct. 1, 1985, when the head of a Thiokol task force studying the problem of the O-ring seals wrote what he called a "red flag" memo to company managers.

It begins: "HELP! The seal task force is constantly being delayed by every possible means . . . MSFC [Marshall Space Flight Center] is correct in stating that we do not know how to run a development program."

The documents also show that in March 1984 an engineer working on the Air Force's Titan program wrote a memo to Mulloy telling him that the Titan's solid rocket boosters were also experiencing erosion of the O-rings and suggesting that, because of design differences, the problems were likely to be even more serious in the shuttle.

Yet, according to the testimony, NASA never informed the Air Force of the problems it was having with the shuttle's O-rings, a lapse that brought a sharp rebuke from Maj. Gen. Donald J. Kutyna, director of Air Force space systems.

An Air Force Titan rocket carrying a classified military satellite exploded shortly after being launched from California's Vandenberg Air Force Base on April 19 and investigators are looking at faulty O-rings as a possible cause.

During the hearing, panel members repeatedly expressed exasperation and anger at NASA and Thiokol officials for failing to take the warnings about the O-rings more seriously.

"If you read the documents, it seems to be everything was almost covered up, ever so slightly noted, and it seemed to be such a serious problem . . . ," Rogers said.

During the hearing, McDonald told the panel that he had been removed from his job as Thiokol's director of solid rocket boosters and named as "director of special projects" without a staff, a post he described as "a more menial job."

McDonald said the transfer came shortly after he first testified before the commission about how, on the night before the Jan. 28 launch, he repeatedly argued with Mulloy and others against proceeding with the flight because of his concern about the impact of cold weather on the O-rings.

"We have made no attempt to freeze anyone out of the data," Thiokol vice president Ed Garrison told members of the panel in separate testimony Friday. "We haven't demoted anyone. We've changed a lot of duties, but we haven't demoted anyone . . . . We are very sensitive to that . . . . ".