The Smithsonian Institution is creating a resident jazz orchestra at the National Museum of American History to give free concerts of big-band works by such jazz greats as Duke Ellington, Count Basie and Benny Goodman.

Museum director Roger Kennedy says the 17-member orchestra will be formed in time to present an inaugural series of six weekend concerts this summer, using original manuscripts and accurate transcriptions of classic jazz pieces.The orchestra's co-directors will be Gunther Schuller, former president of the New England Conservatory of Music and founder of the New England Ragtime Orchestra, and David N. Baker, chairman of the jazz department of the Indiana University School of Music and a former big-band musician.

"If a music is not played by living, breathing, emotionally expressive performers, that music will die," Schuller said.

Kennedy said the formation of the Smithsonian Jazz Masterworks Orchestra was made possible by a $328,000 congressional appropriation last year to expand the Smithsonian's national jazz program. The bulk of the money will support the orchestra.

Other projects will include publication of classic jazz scores in a multi-volume series of Jazz Masterworks Editions. The first three volumes, to be released in late 1992, will include compositions by Ellington, Basie and Fletcher Henderson.