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                                                                    Exhibit 10.4


                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "AGREEMENT") is entered into as of
January 1, 2000, between PEC Solutions, Inc., a Delaware corporation (the
"COMPANY"), and David C. Karlgaard (the "EXECUTIVE").

         WHEREAS, the Executive is currently an employee of the Company; and

         WHEREAS, the Company and the Executive desire to continue the
Executive's employment with the Company on the terms and conditions of this
Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the legal sufficiency of which is hereby acknowledged, and
intending to be legally bound, the Company and the Executive agree as follows:

1.       EMPLOYMENT.  The Company hereby agrees to continue to employ the
         Executive, and the Executive hereby agrees to continue employment with
         the Company, subject to the terms and conditions of this Agreement.

2.       TITLE AND DUTIES.

         2.1      TITLE. The Executive shall be employed as President and Chief
                  Executive Officer of the Company.

         2.2      DUTIES. During his employment under this Agreement, the
                  Executive shall have such duties and responsibilities not
                  materially inconsistent with his title and position as may be
                  properly assigned to him from time to time by the Company's
                  Board of Directors (the "BOARD OF DIRECTORS"). The Executive
                  shall devote full attention and substantially all of his
                  business time to the business and affairs of the Company while
                  employed under this Agreement. The Executive shall use his
                  best efforts to faithfully perform his duties and fulfill his
                  responsibilities hereunder.

3.       TERM. This Agreement shall be effective for a term (the "TERM OF THIS
         AGREEMENT") which shall include: (i) an initial period beginning on
         January 1, 2000 (the "EFFECTIVE DATE"), and continuing through December
         31, 2001, and (ii) immediately after such initial period, successive
         12-month renewal periods, through the last day of the renewal period in
         which the Executive's employment with the Company is terminated as
         provided in Section 5.



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4.       COMPENSATION AND BENEFITS.

         4.1      BASE SALARY. During the Executive's employment under this
                  Agreement, the Executive shall be entitled to receive a base
                  salary at an annual rate of not less than $276,682, payable in
                  cash in equal periodic installments not less frequent than the
                  periodic installments in effect for payment of salaries to the
                  Company's executives of the same level as the Executive (the
                  "BASE SALARY"). The Base Salary shall be subject to increases
                  pursuant to reviews by the Board of Directors, or a committee
                  appointed by the Board of Directors, at such times as salary
                  reviews are conducted generally for the Company's executives
                  of the same level as the Executive, but in no event less
                  frequent than annually.

         4.2      INCENTIVE STOCK COMPENSATION AND BONUS. During the Executive's
                  employment under this Agreement, the Executive shall be
                  eligible to participate in any stock incentive plans and any
                  bonus plans as may be maintained by the Company from time to
                  time, in whole or in part, for executives of his level. The
                  Executive's awards under such stock incentive plans, and his
                  terms of participation in such bonus plans, shall be
                  determined by the Company, the Board of Directors or such
                  person or administrative body as provided under such plans.

         4.3      BENEFITS. During his employment under this Agreement, the
                  Executive shall be entitled to: (i) participation in such
                  employee retirement and welfare benefit plans, programs,
                  policies and arrangements as maintained by the Company from
                  time to time, in whole or in part, for executives of his
                  level, including but not limited to the Company's employee
                  stock purchase plan (to the extent they become eligible to
                  participate), supplemental retirement plan, and plans
                  providing health benefits, disability benefits, life insurance
                  and sickness and accident insurance; and (ii) paid vacation,
                  holidays, leave of absence, leave for illness, funeral leave
                  and temporary disability leave in accordance with the policies
                  of the Company; and (iii) perquisites as from time to time
                  provided by the Company to executives of his level.

         4.4      EXPENSES. During the Executive's employment under this
                  Agreement, the Company shall reimburse the Executive for
                  ordinary and reasonable out-of-pocket expenses incurred by him
                  in the performance of his duties hereunder, provided that the
                  Executive shall limit and account to the Company for such
                  expenses in accordance with the employee business expense
                  policies and practices of the Company.

5.       TERMINATION OF EMPLOYMENT.

         5.1      TERMINATION BY THE COMPANY WITHOUT GOOD CAUSE.

                  5.1.1    TERMINATION BY THE COMPANY WITHOUT GOOD CAUSE. The
                           Company may terminate the Executive's employment
                           under this Agreement without Good Cause at any time
                           by giving notice thereof to the Executive. Upon such
                           termination, the Executive shall be entitled to such
                           compensation as provided in Section 5.1.2. For
                           purposes of this Agreement, "GOOD


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                           CAUSE" means any of the following, as determined by a
                           majority vote of the Board of Directors after notice
                           to the Executive and an opportunity for the Executive
                           to be heard by the Board of Directors:

                           (A)      The Executive's conviction of, or plea of
                                    nolo contendere to, a felony or crime
                                    involving moral turpitude;

                           (B)      The Executive's fraud on, or
                                    misappropriation of any funds or property
                                    of, the Company;

                           (C)      Personal dishonesty, incompetence, willful
                                    misconduct, willful violation of any law,
                                    rule or regulation (other than minor traffic
                                    violations or similar offenses), or breach
                                    of fiduciary duty, by the Executive which
                                    involves personal profit;

                           (D)      Willful misconduct by the Executive in
                                    connection with the performance of his
                                    duties, or the Executive's willful failure
                                    to perform his duties and responsibilities
                                    in the best interests of the Company;

                           (E)      The Executive's chronic use of alcohol,
                                    drugs or other similar substances affecting
                                    his work performance; or

                           (F)      Breach by the Executive of any provision of
                                    this Agreement or any non-disclosure,
                                    non-competition, non-solicitation or other
                                    similar agreement executed by the Executive
                                    for the benefit of the Company.

                  5.1.2    SEVERANCE PAY. If the Executive's employment under
                           this Agreement is terminated during the Term of this
                           Agreement by the Company without Good Cause, the
                           Executive shall be entitled to continuation in
                           payment of his Base Salary, at the rate in effect
                           immediately before the date of termination, for a
                           period equal to the greater of (A) the period from
                           the day after his last day of employment hereunder
                           through the last day of the Term of this Agreement,
                           or (B) one year; provided that the Executive (a)
                           honors the restrictive covenants as provided in
                           Section 6 of this Agreement and (b) executes a
                           release of all claims arising from his employment by
                           the Company, in such form as may then be used by the
                           Company respecting termination of employees.

         5.2      TERMINATION BY THE COMPANY FOR GOOD CAUSE; DEATH OR
                  DISABILITY.

                  5.2.1    TERMINATION BY THE COMPANY FOR GOOD CAUSE. The
                           Company may terminate the Executive's employment
                           under this Agreement for Good Cause by giving notice
                           thereof to the Executive specifying in reasonable
                           detail the Good Cause based upon which the Company
                           terminates his employment.


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                  5.2.2    TERMINATION UPON DEATH OR DISABILITY. This Agreement
                           shall terminate upon the Executive's death. If the
                           Company determines in good faith that the Executive
                           has a Total and Permanent Disability as defined in
                           this Section, the Company may terminate his
                           employment under this Agreement by notifying the
                           Executive thereof at least 30 days before the
                           effective date of termination. For purposes of this
                           Agreement, "TOTAL AND PERMANENT DISABILITY" means the
                           inability of the Executive to engage in any
                           substantial gainful activity by reason of any
                           medically determinable physical or mental impairment
                           which can be expected to result in death or which has
                           lasted or can be expected to last for a continuous
                           period of not less than twelve months. If there is
                           any dispute between the parties as to the Executive's
                           Total and Permanent Disability, the Company shall
                           select or approve a physician whose determination as
                           to the Executive's Total and Permanent Disability
                           shall bind the parties hereto.

                  5.2.3    EFFECT OF TERMINATION BY THE COMPANY FOR GOOD CAUSE
                           OR TERMINATION UPON DEATH OR TOTAL AND PERMANENT
                           DISABILITY. If the Executive's employment under this
                           Agreement is terminated by the Company for Good Cause
                           or due to the Executive's death or Total and
                           Permanent Disability, all obligations of the Company
                           under this Agreement shall terminate, except as
                           provided in Section 5.3.

         5.3      PAYMENT OF BASE SALARY UPON TERMINATION. Upon a termination of
                  the Executive's employment under this Agreement for any
                  reason, the Executive shall be entitled to receive his Base
                  Salary earned but unpaid through the date of termination, on
                  or before the day on which the Executive would have been paid
                  such amount if his employment hereunder had not been
                  terminated.

         5.4      NO DUTY TO MITIGATE. The Executive shall not be obligated to
                  seek other employment or take any other action by way of
                  mitigation of the amounts payable to the Executive under any
                  of the provisions of this Agreement, and such amounts shall
                  not be reduced whether or not the Executive obtains other
                  employment.

6.       RESTRICTIVE COVENANTS.

         6.1      CONFIDENTIAL INFORMATION. The Executive shall at all times
                  hold in a fiduciary capacity for the benefit of the Company
                  all secret, confidential or proprietary information, knowledge
                  or data relating to the Company, and all of its businesses,
                  which shall have been obtained by the Executive during his
                  employment by the Company and which shall not be or become
                  public knowledge (other than by acts by the Executive or his
                  representatives in violation of this Agreement), including,
                  but not limited to, information regarding clients and agents
                  of the Company (the "CONFIDENTIAL INFORMATION"). During the
                  Executive's employment with the Company under this Agreement
                  and after the termination of such employment, the Executive
                  shall not, without the prior written consent of the Company,
                  communicate or divulge any Confidential Information to any
                  Person (as defined in Section 6.5) other than the Company and
                  those designated by it or use any Confidential Information,
                  except for the benefit of the Company,




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                  provided that the Executive may make disclosures to comply
                  with the law or legal process. Immediately upon termination of
                  the Executive's employment with the Company at any time and
                  for any reason, the Executive shall return to the Company all
                  Confidential Information, including, but not limited to, any
                  and all copies, reproductions, notes or extracts of all
                  Confidential Information.

         6.2      SOLICITATION OF EMPLOYEES. During the Term of this Agreement
                  and, if the Executive's employment under this Agreement is
                  terminated for any reason, for two years after the date of
                  such termination, the Executive shall not: (i) solicit,
                  participate in or promote the solicitation of any person who
                  was employed by the Company, at any time during the
                  three-month period prior to the Executive's termination of
                  employment under this Agreement, to leave the employ of the
                  Company; or (ii) on behalf of himself or any other Person,
                  hire, employ or engage any such person. The Executive further
                  agrees that, during such time, if an employee of the Company
                  contacts the Executive about prospective employment, the
                  Executive will inform such employee that he cannot discuss the
                  matter further without informing the Company.

         6.3      SOLICITATION OF CLIENTS. During the Term of this Agreement
                  and, if the Executive's employment under this Agreement is
                  terminated for any reason, for two years after the date of
                  such termination, the Executive shall not, directly or
                  indirectly, solicit, entice or induce any Client (as defined
                  in Section 6.5) of the Company to become a Client of any
                  Person other than the Company, or to modify, curtail or cease
                  its business with the Company, and the Executive will not
                  assist any Person in taking any such action.

         6.4      REMEDIES FOR BREACH. The Executive agrees that damages in the
                  event of any breach of Sections 6.1 through 6.3 by the
                  Executive would be difficult to ascertain. The Executive
                  therefore agrees that, notwithstanding anything in this
                  Agreement to the contrary, including but not limited to the
                  provisions of Section 13, the Company, in addition to and
                  without limiting any other remedy or right it may have, shall
                  have the right to an injunction or other equitable relief in
                  any court of competent jurisdiction, enjoining any such
                  breach. The Executive hereby waives any and all defenses he
                  may have on the ground of lack of jurisdiction or competence
                  of the court to grant such an injunction or other equitable
                  relief. The existence of this right shall not preclude any
                  other rights and remedies at law or in equity which the
                  Company may have.

         6.5      DEFINITIONS. For purposes of Section 6, the following
                  definitions shall apply:

                  6.5.1    "COMPANY."  "COMPANY" means PEC Solutions, Inc. and
                           all of its subsidiaries and affiliates.

                  6.5.2    "CLIENT." "CLIENT" means any person, entity
                           (including but not limited to a corporation,
                           partnership or trust), division, business unit,
                           department or agency which, at the time of
                           termination of the Executive's employment hereunder
                           or at any time within two years prior thereto, shall
                           have



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                           purchased goods or services from the Company or shall
                           have contacted with the Company to purchase goods or
                           services from the Company.

                  6.5.3    "PERSON." "PERSON" means any individual or entity,
                           including but not limited to any corporation, trust,
                           sole proprietorship, joint venture or partnership.

         6.6      SURVIVAL OF SECTION 6. The Executive agrees that the
                  nondisclosure, nonemployment and nonsoliciation agreements in
                  this Section 6 each constitute separate agreements
                  independently supported by good and adequate consideration
                  and, notwithstanding anything in this Agreement to the
                  contrary, shall be severable from the other provisions of, and
                  shall survive, this Agreement.

7.       NOTICES. Any notices, requests, demands and other communications
         provided for by this Agreement shall be sufficient if in writing and if
         sent by registered or certified mail to the Executive at the last
         address he has filed in writing with the Company or, in the case of the
         Company, to the Company's principal executive offices.

8.       WITHHOLDING TAXES. The Company shall have the right, to the extent
         permitted or required by law, to withhold from any payment of any kind
         due to the Executive under this Agreement to satisfy the tax
         withholding obligations of the Company under applicable law.

9.       SUCCESSORS AND ASSIGNS. The rights, duties and obligations of a party
         hereunder may not be assigned, delegated or assumed without the prior
         written consent of the other party, provided that the Company may
         assign this Agreement to any subsidiary thereof, without the
         Executive's consent, and such assignment shall not constitute, a
         termination of his employment hereunder. Nothing herein shall cause a
         termination of this Agreement upon the acquisition, reorganization, or
         merger of the Company. This Agreement shall be binding upon and shall
         inure to the benefit of the parties hereto and their respective
         successors or permitted assigns. Nothing herein shall be construed to
         confer upon any person not a party hereto any right, remedy or claim
         under or by reason of this Agreement.

10.      ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
         of the Executive and the Company with respect to the subject matter
         hereof and supersedes and voids any and all prior agreements or
         understandings, written or oral, regarding the subject matter hereof.

11.      AMENDMENT AND WAIVER. This Agreement may not be changed, modified, or
         discharged orally, but only by an instrument in writing signed by the
         parties. No waiver of any term or condition of this Agreement shall be
         effective unless agreed to in writing between the parties.

12.      GOVERNING LAW AND SEVERABILITY. This Agreement shall be governed by the
         laws of the Commonwealth of Virginia (without giving effect to choice
         of law principles or rules thereof that would cause the application of
         the laws of any jurisdiction other than the State of Virginia) and the
         invalidity or unenforceability of any provisions hereof shall in no way
         affect the validity or enforceability of any other provision. Any
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         Agreement which is prohibited or unenforceable in any jurisdiction
         shall, as to such jurisdiction, be ineffective only to the extent of
         such prohibition or unenforceability without invalidating or affecting
         the remaining portion of such provision or the other provisions hereof,
         and any such prohibition or unenforceability in any jurisdiction shall
         not invalidate or render unenforceable such provision in any other
         jurisdiction.

13.      ARBITRATION. disputes regarding the Executive's employment with the
         Company, including, without limitation, any dispute UNDER THIS
         AGREEMENT which cannot be resolved by negotiations between the Company
         and the Executive, but excluding any disputes regarding executive's
         compliance with Section 6, shall be submitted to, and solely determined
         by, final and binding arbitration conducted by Jams/Endispute, Inc.'s
         arbitration rules applicable to employment disputes, and the parties
         agree to be bound by the final award of the arbitrator in any such
         proceeding. The arbitrator shall apply the laws of the Commonwealth of
         virginia with respect to the interpretation or enforcement of any
         matter relating to this Agreement; in all other cases the arbitrator
         shall apply the laws of the state specified in COMPANY'S alternative
         dispute resolution policy as in effect from time to time (if any).
         Arbitration may be held in fairfax county, virginia, or such other
         place as the parties may mutually agree, and shall be conducted ONLY by
         a former judge. Judgment upon the award by the arbitrator may be
         entered in any court having jurisdiction thereof.

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

                                           PEC SOLUTIONS, INC.

                                           By:  /s/ Paul G. Rice
                                                --------------------------------
                                           Title: Chief Operating Officer

                                           EXECUTIVE

                                           /s/ David C. Karlgaard
                                           -------------------------------------
                                           David C. Karlgaard


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