They're not disfunctional. They're just not prepared for a galactic scale war. They've not had such a war in a millennium. They handle diplomatic disputes, trade disputes, piracy, smugglers and so forth. They don't have a "Starfleet"(I almost dropped the M-bomb)
I personally think it's sort of brilliant how expectations of the Clone Wars were subverted. Many thought the Jedi fought against some cliche sci-fi evil clone army. As it turns out, the clones are the good guys, but not really. They betray the Jedi, kill them, and go on to form the Stormtrooper Corps. It's a clever and original(AFAIK) way to tell the story of how all this happened in a generation or less.
It's like how every Roman Emperor seized power. Create a conflict, raise an army, build loyalty, wipe out the old regime, put your loyal Army and loyal politicians everywhere