<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                 ---------------
                                    FORM 10-Q

[X] Quarterly Report, Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

                For the Quarterly Period Ended June 30, 1998, or

[ ] Transition Report, Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

                    For the Transition Period _____ to ______

                         Commission File Number 2-88617

                                 QuesTech, Inc.
             (Exact name of Registrant as specified in its charter)

                                ----------------

          Virginia                                   54-0844913
--------------------------------         ------------------------------------
(State or other jurisdiction of         (IRS Employer Identification Number)
 incorporation or organization)


7600-A Leesburg Pike,
Falls Church, Virginia                                  22043
---------------------------------         -----------------------------------
(Address of principal executive offices)              (Zip code)


                                 (703) 760-1000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              Yes  X      No
                                  ---         ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


        Common Stock, $0.05 par value                   1,916,004
        -----------------------------                 -----------------------
                    Class                             Outstanding as of
                                                      August 12, 1998


                                       1
<PAGE>



                         QuesTech, Inc. and Subsidiaries

                                    Form 10-Q
                       For the Quarter Ended June 30, 1998

                                    I N D E X




<TABLE>
<CAPTION>

                                                            Page No.
                                                            -------
<S>                                                          <C>

PART I.           Financial Information

  Item 1  Financial Statements

     CONDENSED CONSOLIDATED BALANCE SHEET                      3

     CONSOLIDATED STATEMENTS OF EARNINGS                     5-6

     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS           7

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY           8

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                9

  Item 2  Management's Discussion and Analysis of
          Financial Condition and Results of Operations       12

PART II.  Other Information

  Item 1  Legal Proceedings                                   15

  Item 6  Exhibits and Reports on Form 8K                     15

Officers' Signatures                                          16

Index to Exhibits                                             17
</TABLE>


                                        2

<PAGE>



                         QuesTech, Inc. and Subsidiaries

                      CONDENSED CONSOLIDATED BALANCE SHEET

                                  ASSETS

<TABLE>
<CAPTION>

                                                 Jun. 30       Dec. 31
                                                   1998          1997
                                                ---------      ---------
                                               (Unaudited)     (Audited)
                                               -----------     ---------
<S>                                             <C>           <C>       
CURRENT ASSETS
  Cash and cash equivalents ................   $    89,400   $   108,500
  Accounts receivable ......................    16,863,700    13,002,000
  Inventories ..............................        89,600        69,200
  Prepaid expenses and other ...............       243,400       165,300
  Deferred income taxes ....................       239,500       239,500
                                               -----------   -----------
       Total Current Assets ................   $17,525,600   $13,584,500

EQUIPMENT AND LEASEHOLD IMPROVEMENTS - at 
  cost less accumulated depreciation and
  amortization of $6,834,100 and $6,298,200,
  respectively .............................     5,220,100     5,434,400
GOODWILL, less accumulated amortization of
  $1,817,700 and $1,726,200, respectively ..     1,118,900     1,210,400
DEFERRED INCOME TAXES, net of valuation
  allowance of $262,000 ....................     1,369,900     1,369,900
OTHER ASSETS ...............................     2,248,500     2,369,600
                                               -----------   -----------
  TOTAL ASSETS                                 $27,483,000   $23,968,800
                                               -----------   -----------
                                               -----------   -----------
</TABLE>



The accompanying notes are an integral part of these statements.



                                        3

<PAGE>



                         QuesTech, Inc. and Subsidiaries

                      CONDENSED CONSOLIDATED BALANCE SHEET

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                 Jun. 30       Dec. 31
                                                   1998          1997
                                                ---------      ---------
                                               (Unaudited)     (Audited)
                                                ---------      ---------
<S>                                            <C>           <C>        
CURRENT LIABILITIES
  Line of Credit ...........................   $ 4,883,200   $ 3,919,800
  Current maturities of long-term
    obligations payable ....................       512,000       511,900
  Accounts payable .........................     4,011,100     2,195,400
  Accrued liabilities ......................     5,248,000     5,095,800
  Income taxes
    Currently payable ......................       239,700           --
                                               -----------   -----------
       Total Current Liabilities ...........   $14,894,000   $11,722,900

LONG-TERM OBLIGATIONS ......................     1,274,900     1,527,800

INDEBTEDNESS TO RELATED PARTIES ............     1,625,400     1,542,900

ACCRUED POST-RETIREMENT BENEFIT COST .......     1,739,600     1,577,000

OTHER LONG-TERM OBLIGATIONS ................       846,200       894,300
                                               -----------   -----------
       Total Liabilities ...................   $20,380,100   $17,264,900
                                               -----------   -----------

STOCKHOLDERS' EQUITY
  Common stock - authorized 3,000,000
      shares of $.05 par value, issued 
      1,925,904 and 1,657,304 shares,
      outstanding 1,916,004 and 1,618,557 
      shares at June 30, 1998
      and December 31, 1997 ................        97,100        82,800
  Additional paid in capital ...............     5,081,300     2,878,300
  Retained earnings ........................     4,623,600     4,297,900
  Less Treasury Stock at cost ..............       (30,200)     (210,500)
  Due from SECT ............................    (2,668,900)     (344,600)
                                                ----------      -------- 
       Total Stockholders' Equity ..........   $ 7,102,900   $ 6,703,900
                                               -----------   -----------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $27,483,000   $23,968,800
                                               -----------   -----------
                                               -----------   -----------
</TABLE>



The accompanying notes are an integral part of these statements.



                                        4

<PAGE>



                         QuesTech, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)


<TABLE>
<CAPTION>

                                                 Three Months Ended June 30,
                                                      1998          1997
                                                      ----          ----
<S>                                              <C>            <C>        
Revenues ......................................  $21,456,100    $19,354,300

Operating expenses
  Salaries, wages and employee benefits .......   11,098,700     10,118,300
  Other operating expenses ....................    9,414,000      8,231,800
                                                 -----------    -----------
        Total operating expenses ..............   20,512,700     18,350,100
                                                 -----------    -----------

Earnings from continuing operations ...........      943,400      1,004,200

  Interest expense ............................     (229,400)      (118,700)
                                                 -----------    -----------

  Earnings from continuing operations
    before income taxes .......................      714,000        885,500

Provision for income taxes ....................     (302,800)      (375,400)
                                                 -----------    -----------
  Net earnings from continuing operations .....      411,200        510,100

Discontinued operations:
        Loss from discontinued
          operations, net of tax effect .......     (231,500)      (340,000)
                                                 -----------    -----------

Net earnings (loss) ...........................  $   179,700    $   170,100
                                                 -----------    -----------
                                                 -----------    -----------

Earnings per share, continuing operations:
  Basic .......................................  $       .28    $       .36
  Diluted .....................................          .25            .34

Earnings (loss) per share, discontinued 
 operations:
  Basic .......................................  $      (.16)   $      (.24)
  Diluted .....................................         (.14)          (.23)

Earnings (loss) per share:
  Basic .......................................  $       .12    $       .12
  Diluted .....................................          .11            .11

Weighted Average Number of common shares 
 outstanding:
   Basic ......................................    1,455,135      1,438,423
   Diluted ....................................    1,661,027      1,512,956
</TABLE>


The accompanying notes are an integral part of these statements.


                                        5

<PAGE>



                         QuesTech, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)


<TABLE>
<CAPTION>

                                                 Six Months Ended June 30,
                                                      1998          1997
                                                      ----          ----
<S>                                              <C>            <C>        
Revenues ......................................  $40,604,300    $39,167,000

Operating expenses
  Salaries, wages and employee benefits .......   21,977,500     20,163,200
  Other operating expenses ....................   16,759,800     17,230,200
                                                 -----------    -----------
        Total operating expenses ..............   38,737,300     37,393,400
                                                 -----------    -----------

Earnings from continuing operations ...........    1,867,000      1,773,600

  Interest expense ............................     (419,900)      (217,200)
                                                 -----------    -----------

  Earnings from continuing operations
    before income taxes .......................    1,447,100      1,556,400

Provision for income taxes ....................     (613,600)      (659,900)
                                                 -----------    -----------
  Net earnings from continuing operations .....      833,500        896,500

Discontinued operations:
        Loss from discontinued
          operations, net of tax effect .......     (507,800)      (604,800)
                                                 -----------    -----------

Net earnings (loss) ...........................  $   325,700    $   291,700
                                                 -----------    -----------
                                                 -----------    -----------

Earnings per share, continuing operations:
  Basic .......................................  $       .58    $       .62
  Diluted .....................................          .53            .59

Earnings (loss) per share, discontinued operations:
  Basic .......................................  $      (.35)   $      (.42)
  Diluted .....................................         (.32)          (.40)

Earnings (loss) per share:
  Basic .......................................  $       .23    $       .20
  Diluted .....................................          .21            .19

Weighted average number of common shares outstanding:
    Basic .....................................    1,449,132      1,437,686
    Diluted ...................................    1,584,749      1,510,431
</TABLE>



The accompanying notes are an integral part of these statements.


                                        6

<PAGE>



                         QuesTech, Inc. and Subsidiaries

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>

                                                          Six Months
                                                         Ended June 30
                                                      ------------------
                                                      1998          1997
                                                      ----          ----
<S>                                               <C>            <C>  
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities:
  Net earnings .................................  $   325,700    $   291,700

Adjustments to reconcile net earnings to net 
  cash provided by operating activities:
    Loss from discontinued operations ..........      507,800        604,800
    Depreciation and amortization ..............      554,300        429,000
    Increase in value of Deferred Compensation
      Plan assets ..............................      (90,000)       (88,700)
    (Increase) decrease in net assets of
      discontinued operations ..................          200           (200)
    Changes in assets and liabilities ..........     (237,100)       676,500
                                                  -----------    -----------
      Net cash provided by continuing
        operations .............................    1,060,900      1,913,100
                                                  -----------    -----------


Cash flows from investing activities:
  Capital expenditures .........................     (400,100)      (732,200)
  Investment in other assets ...................          --        (128,500)
                                                  -----------    -----------
      Net cash (used in) investing activities ..     (400,100)      (860,700)
                                                  -----------    -----------
Cash flows from financing activities:
  Increase (decrease) in line of credit ........      963,400       (911,500)
  Cash proceeds from exercise of stock options .       73,200         16,000
  Repayment of long-term debt ..................   (1,672,100)       (74,800)
  Repayment of other long-term obligations .....      (44,400)       (20,600)
                                                  -----------    -----------
      Net cash (used in) financing activities ..     (679,900)      (990,900)
                                                  -----------    -----------

Net increase (decrease) in cash ................      (19,100)        61,500
Cash, beginning of period ......................      108,500         54,300
                                                  -----------    -----------
Cash, end of period ............................  $    89,400    $   115,800
                                                  -----------    -----------
                                                  -----------    -----------

Cash payments for:
  Interest .....................................  $   484,300    $   224,300
  Income taxes .................................          --         117,000

Non-cash financing activities:
Issuance of 268,000 shares to the SECT .........  $ 2,144,000            --
Sale of 28,847 shares of Treasury stock
  to the SECT ..................................  $   180,300            --
</TABLE>



The accompanying notes are an integral part of these statements.

                                        7

<PAGE>



                         QuesTech, Inc. and Subsidiaries

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>

                                                       Six Months
                                                      Ended June 30
                                                    1998         1997
<S>                                            <C>            <C>       
Common Stock:
  Beginning balance .........................  $    82,800    $   82,500
  Exercise of options .......................          900           --
  Issuance of shares to the SECT ............       13,400           200
                                               -----------    ----------
  Ending balance ............................       97,100        82,700
                                               -----------    ----------

Additional paid in capital
  Beginning balance .........................    2,878,300     2,835,600
  Exercise of options .......................       72,400        14,800
  Issuance of shares to the SECT ............    2,130,600           --
                                               -----------    ----------
  Ending balance ............................    5,081,300     2,850,400
                                               -----------    ----------

Retained Earnings
  Beginning balance .........................    4,297,900     3,652,000
  Net Earnings ..............................      325,700       291,700
                                               -----------    ----------
  Ending balance ............................    4,623,600     3,943,700
                                               -----------    ----------

Treasury Shares:
  Beginning balance .........................     (210,500)     (193,100)
  Issuance of shares to the SECT ............      180,300           --
  Exercise of options .......................          --          1,000
                                               -----------    ----------
  Ending balance ............................      (30,200)     (192,100)
                                               -----------    ----------

Due from SECT
  Beginning balance .........................     (344,600)     (344,600)
  Issuance of shares to the SECT ............   (2,324,300)          --
                                               -----------    ----------
  Ending balance ............................   (2,668,900)     (344,600)
                                               -----------    ----------

Total Stockholders' Equity ..................  $ 7,102,900    $6,340,100
                                               -----------    ----------
                                               -----------    ----------
</TABLE>




The accompanying notes are an integral part of these statements.



                                        8

<PAGE>



                         QuesTech, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements
                             June 30, 1998 and 1997
                                   (Unaudited)


1.   General

         The accompanying unaudited condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in the annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the company believes that the disclosures made
are adequate to make the information presented not misleading.

         In the opinion of management, the accompanying condensed financial
statements for the periods presented reflect all adjustments and
reclassifications that are necessary for fair presentation. It is suggested that
these condensed financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
company's latest annual report to the Securities and Exchange Commission on Form
10-K.

         Subsequent to the date of the financial statements, the Company has
announced that a definitive purchase agreement has been approved by the Boards
of Directors of CACI International Inc. and QuesTech, Inc. and executed by both
parties for CACI to acquire, through a subsidiary, all of the issued and
outstanding shares of the company.

         Closing is still subject to regulatory approval, disposal of QuesTech's
wholly owned subsidiary, QuesTech Packaging, Inc. and QuesTech shareholder
approval.

         Assuming successful completion of the actions listed above, CACI and
QuesTech anticipate closing the acquisition in late September or early October
of 1998.

2.   Earnings Per Share

         In 1997 the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128 (SFAS 128), "Earnings Per Share." This Statement
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator in the diluted EPS computation.

                                        9

<PAGE>



  Basic EPS ignores potential dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects potential dilution, dilution
that would occur if securities were converted into common stock or other
contracts to issue common stock were exercised, resulting in the issuance of
additional common stock that would share in the earnings of the entity. In
complying with the requirements of SFAS No. 128, the Company has restated all
prior period EPS data.

         Although outstanding, the shares held by the Company-controlled Stock
Employee Compensation Trust ("SECT") are excluded from the weighted average
number of shares, for purposes of calculating earnings per share. As of June 30,
1998, a total of 354,600 shares are subject to outstanding stock option
agreements and if dilutive, are accounted for as common stock equivalents under
the treasury stock method. The strike prices of these options range from $4.00
to $7.70 per share. The average bid price of the Company's stock for the quarter
ended June 30, 1998 was $13.65 per share.

         The following table reconciles basic and diluted EPS:

<TABLE>
<CAPTION>

                                                       Six Months
                                                     Ended June 30
                                                     -------------
                                                   1998         1997
                                                   ----         ----
<S>                                             <C>          <C>       
Numerator

Net Income                                      $  325,700   $  291,700
                                                ----------   ----------
                                                ----------   ----------
Denominator
Denominator for basic EPS-weighted
 average shares                                  1,449,132    1,437,686

Effect of dilutive stock options                   135,617       72,745
                                                ----------   ----------
Denominator for diluted EPS                      1,584,749    1,510,431
                                                ----------   ----------
                                                ----------   ----------
</TABLE>


Disclosures about Segments of an Enterprise and Related Information

         The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments
of an Enterprise and Related Information," effective for periods beginning after
December 15, 1997. This Statement establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers.

        The Statement need not be applied to interim financial statements in the
initial year of its application, but comparative information for interim
periods in the initial year of application shall be reported in financial
statements for interim periods in the second year of application.  The


                                       10

<PAGE>



Company has opted to comply with the Statement's requirements effective with its
filing of the 1998 10-K.

New Accounting Standards

         The Financial Accounting Standards Board recently issued two new
accounting standards that will affect the Company's financial reporting methods.
Under Statement of Financial Accounting Standards No. 130 ("SFAS 130"), the
Company will be required to display an amount representing total comprehensive
income and its components in the financial statements. Reclassification of
financial statements for earlier periods provided for comparative purposes is
required. Under Statement of Financial Accounting Standards No. 131 ("SFAS No.
131"), the Company will be required to report certain information about its
operating segments in its interim and annual financial statements, in addition
to certain information about its products and services, the geographic areas in
which it operates and its major customers. In the initial year of application,
comparative information for earlier years is to be restated. Both statements are
effective for the Company in 1998.

Discontinued Operations

         During the second quarter of 1998, as a result of the potential merger
of QuesTech and CACI International, a decision was made to dispose of the
commercial packaging operation, QuesTech Packaging, Inc. (QTPI). QTPI designs
and manufactures plastic containers utilizing its patented process and custom
designed manufacturing equipment.

         QuesTech management is exploring various alternatives for disposing of
the business of QuesTech Packaging, Inc. Therefore, terms of the disposal are
not known at this time. Management intends to consummate the disposal prior to
the proposed merger described above. The Company has elected to treat the
financial results of QTPI as discontinued operations for statement presentation
purposes in the Consolidated Statement of Earnings and the Condensed
Consolidated Statements of Cash Flows.

         Based upon the alternatives presently available to the Company for
affecting this disposal, no adjustment has been made to the carrying value of
QTPI's net assets.

                                       11

<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition
                       and Results of Operations

RESULTS OF OPERATIONS

         The following table sets forth major items reflected in the Unaudited
Consolidated Statement of Earnings as a percentage of revenue.

<TABLE>
<CAPTION>

                                                   Six Months Ended
                                                       June 30
                                                   ------------------
                                                   1998        1997
                                                   ----        ----
<S>                                               <C>         <C>    
Revenues                                          100.00%     100.00%
Operating Expenses                                 95.40%      95.47%
                                                  ------      ------ 
Earnings from continuing operations                 4.60%       4.53%
Interest                                           (1.03%)      (.55%)
Provision for income taxes                         (1.51%)     (1.68%)
                                                  ------      ------  
Net earnings from continuing operations             2.06%       2.30%
Discontinued operations (net of tax)               (1.25%)     (1.54%)
                                                  ------      ------  

     Net Earnings                                    .81%        .76%
                                                     ---         --- 
                                                     ---         --- 
</TABLE>


Continuing Operations

         For the six months ended June 30, 1998, the Company's revenues were
$40.6 million, up 3.7% over the same period for the previous year. The increase
resulted from new contracts awarded to the Company's QuesTech Service Company
("QTSC") subsidiary in late 1997 and early 1998. The revenues of QuesTech
Research Division ("QTRD") declined as a result of a decrease in
subcontracts/materials tasking. QTRD's largest contract, TEFS, a U.S. Army
contract, accounted for 44% of the Division's combined government contract
revenues during the six months ended June 30, 1998, as compared to 49% during
the same period last year.

         Operating expenses were $38.7 million for the six months ended June 30,
1998, up 3.6% over the same period for 1997. An increase in salaries, wages and
employee benefits resulted from increased direct labor; specifically, new hires
for new contract awards. For the same period, other operating expenses declined
by 2.7% due to reduced contractual requirements for pass-through expenses,
primarily for TEFS. The decline in other operating expenses as a percentage of
total revenues has resulted in an increase in earnings from continuing
operations of 5.3% to $1,867,000 for the six months ended June 30, 1998.

         Revenues for the second quarter of 1998 increased by 10.9% to $21.5
million when compared with the same period last year. Other operating expenses
increased 14.4% as a result of new subcontract/materials-intensive contractual
requirements. Total operating expenses increased by 11.8% to $20.5 million. This
has resulted in a decrease in earnings from continuing operations by 6.1% to
$943,400 for the quarter compared to the same period last year.


                                       12

<PAGE>




         Despite improved operating margins, pretax earnings from continuing
operations declined to $714,000 for the quarter and $1,447,100 for the six-month
period ended June 30, 1998 due to a significant increase in interest costs.
Basic earnings per share were $.23 on net earnings of $325,700 for the six
months ended June 30, 1998, up 15% and 11.7%, respectively, over the same period
last year, when basic earnings per share were $.20 on net earnings of $291,700.

LIQUIDITY AND CAPITAL RESOURCES

     The following table sets forth certain financial data with respect to
changes in the Company's liquidity and capital resources since December 31,
1997: (in thousands of dollars except for ratios)

<TABLE>
<CAPTION>

                             6/30/98       12/31/97    NET CHANGES
                             -------       --------    -----------
<S>                          <C>            <C>          <C>   
Working capital              $ 2,632        $ 1,862      $  770
Current assets                17,526         13,585       3,941
Current liabilities           14,894         11,723       3,171
Working capital ratio (1)       1.18           1.16         .02
</TABLE>

(1) Current assets over current liabilities.

         During the second quarter of 1998, the Company continued to use
borrowings under its line of credit facility to finance its operations and
capital expenditures. Cash flows from operations were impacted by a recent
increase in receivables due to a change in payment practices by certain
government agencies.

         In April of 1998, the Company renegotiated an increase in its line of
credit from $6 million to $8 million and an extension of the term to May 31,
1999. Other terms of the agreement did not materially change.

YEAR 2000 ISSUE

         Management has completed its investigation of whether the Company will
be adversely impacted by the issue of whether its systems are Year 2000
compliant. Based on this review, management has determined that a material
adverse impact on the Company's financial statements is unlikely.

INFLATION

         During the second quarter of 1998, the impact of inflation on the
Company's costs has been minimal. Inflationary costs are normally anticipated in
the pricing structure of contracts and recovered through the reimbursement of
contract costs incurred.


                                       13

<PAGE>



BACKLOG

         Set forth in the table below is the Company's funded and unfunded
backlog as of June 30, 1998 and June 30, 1997.

<TABLE>
<CAPTION>

                Funded Backlog                 Unfunded Backlog
                --------------                 ----------------
                   June 30                        June 30
                   -------                        -------
              1998          1997              1998           1997
              ----          ----              ----           ----
<S>       <C>           <C>              <C>            <C>         
          $31,748,100   $38,608,600      $298,955,600   $367,148,200
</TABLE>

         "Backlog" is the aggregate contract revenues remaining to be earned
under written contracts as of the stated date. "Funded backlog" is that portion
which is covered by funding appropriations to and allotments by the procuring
agencies. "Unfunded backlog" is that portion of backlog equal to the backlog
less the funded backlog. Although there can be no assurance that unfunded
backlog will become funded backlog, historically a majority of the Company's
unfunded backlog has eventually been converted into funded backlog.


                                       14

<PAGE>



                                     PART II


Item 1.  Legal Proceedings

         The Company, including its subsidiaries, is not subject to any
material pending legal proceedings, and none of the assets of the Company or its
subsidiaries are subject to any such proceedings, other than routine litigation,
if any, incidental to the business and against which the Company is either
adequately insured, or which is not material.

Item 4.  Submission of Matters to a Vote of Security Holders

         The Annual Meeting of Stockholders was held on May 15, 1998 at the
Embassy Suites Hotel, 8517 Leesburg Pike, Vienna, Virginia 22182. At the Annual
Meeting, 91.2% of all outstanding stock entitled to vote was represented by
persons in attendance or by proxy. All nominees to the Board of Directors were
elected and all of the directors (Vincent L. Salvatori, Gerald F. Mayefskie,
Sebastian P. Musco, Vincent M. Russo and Edward G. Broenniman), received at
least 1,556,738 votes or 80.8% of the votes counted. The re-appointment of Grant
Thornton LLP, as the independent auditors of the Company for the fiscal year
ended December 31, 1998, was approved by a vote of 1,583,110 (for) to 147,124
(against), with 25,729 votes abstaining.

Item 6.  Exhibits and Reports on Form 8-K.

         (a) Exhibits required in connection with this quarterly report on Form
10-Q are listed in the Exhibit Index following the signature page. Certain of
such exhibits, which have heretofore been filed with the Securities and Exchange
Commission and which are designated by reference to their exhibit numbers in
prior filings are incorporated herein as exhibits by such reference and made a
part hereof.

         (b) On June 4, 1998, the Company filed a Current Report on Form 8-K
reporting that on May 18, 1998 the Company had entered into a Letter of Intent
with CACI International Inc. expressing the mutual intent of the parties for
CACI to acquire, through a subsidiary, all of the issued and outstanding shares
of the Company.

                                       15

<PAGE>



                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                QuesTech, Inc.
                                         --------------------------------
                                                 (Registrant)




Date:      August 12, 1998                  Vincent L. Salvatori
         --------------------            --------------------------------
                                          Vincent L. Salvatori
                                          Chief Executive Officer and
                                          Chairman of the Board



Date:      August 12, 1998                  Joseph P. O'Connell, Jr.
         --------------------            --------------------------------
                                          Joseph P. O'Connell, Jr.
                                          Vice President and
                                          Chief Financial Officer



                                       16

<PAGE>



                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

                                                                                                               Sequential
Exhibit No.                Description                                                                        page numbers
-----------                -----------                                                                        ------------
<S>                        <C>                                                                                <C>
 3                         Restated Articles of Incorporation                                                      *
                           and Bylaws of the Registrant,
                           incorporated by reference to Exhibit 3
                           of the Registrant's Registration
                           No. 2-88617

10.1                       Officer and Managers Discretionary                                                      *
                           Bonus Plan, as amended and restated, incorporated by
                           reference to Exhibit 10(d) of Registrant's Annual
                           Report on Form 10-K for the period ended
                           December 31, 1987

10.2                       QuesTech Variable Deferral Plan                                                         *
                           incorporated by reference to Exhibit
                           10(k) of Registrant's Annual Report
                           on Form 10-K for the period ended
                           December 31, 1987

10.3                       Limited Partnership Agreement with                                                      *
                           respect to the Kitty Hawk Office Center incorporated
                           by reference to Exhibit 10(v) of Registrant's Annual
                           Report on Form 10-K for the period ended December 31,
                           1989

10.5                       Amended QuesTech, Inc. Officers and                                                     *
                           Managers Deferred Compensation Plan incorporated by
                           reference to Exhibit 10(t) of Registrant's Annual
                           Report on Form 10-K for the period ended
                           December 31, 1992

10.6                       Lease dated November 24, 1993 between                                                   *
                           Louis Esposito and the Registrant
                           incorporated by reference to Exhibit
                           10(x) of Registrant's Annual Report
                           on Form 10-K for the period ended
                           December 31, 1993

10.7                       QuesTech, Inc. Stock Employee Compen-                                                   *
                           sation Trust incorporated by reference to Exhibit
                           10(y) of Registrant's Annual Report on Form 10-K for
                           the period ended December 31, 1993

                           (a)      Amended and Restated Stock                                                     *

                                       17

<PAGE>


                                    Employee Compensation Trust incorporated by
                                    reference to Exhibit 10(q) of Registrant's
                                    Annual Report on Form 10-K for the period
                                    ended December 31, 1995

                           (b)      Amended and Restated Stock Employee                                            *
                                    Compensation Trust dated March 25, 1998

10.8                       1994 Incentive Stock Option Plan                                                        *
                           incorporated by reference to Exhibit 10(aa) of
                           Registrant's Annual Report on Form 10-K for the
                           period ended December 31, 1994

                           (a)      Amendment to 1994 Incentive Stock                                              *
                                    Option Plan dated November 15,
                                    1995 incorporated by reference to
                                    Exhibit 10(p) of Registrant's
                                    Annual Report on Form 10-K for
                                    the period ended December 31, 1995

10.9                       Lease dated March 14, 1995 between John                                                 *
                           Hancock Mutual Life Insurance Company
                           and the Registrant incorporated by
                           reference to Exhibit 10(cc) of Regis-
                           trant's Annual Report on the Form 10-K
                           for the period ended December 31, 1994

10.10                      Amended and Restated Loan and Security                                                  *
                           Agreement between Signet Bank and the
                           Registrant, dated June 3, 1996 incorporated by
                           reference to Exhibit 10(r) of Registrant's Quarterly
                           Report on Form 10-Q for the period ended June 30, 1996

                           (a)      Amendment No. 1, dated May 31,                                                 *
                                    1997, to the Amended and Restated
                                    Loan and Security Agreement between
                                    Signet Bank and Registrant, incorporated by
                                    reference to Exhibit 10(t) of Registrant's
                                    Quarterly Report on Form 10-Q for the period
                                    ended June 30, 1997

                           (b)      Amendment No. 2, dated December 23,                                            *
                                    1997, to the Amended and Restated
                                    Loan and Security Agreement between
                                    Signet Bank and Registrant, incorporated by
                                    reference to Exhibit 10.10(b) of
                                    registrant's Annual Report on Form 10-K for
                                    the period ended December 31, 1997

                                       18

<PAGE>


                           (c)      Amendment No. 3, dated April 5, 1998,                                          *
                                    to the Amended and Restated Loan and
                                    Security Agreement between First
                                    Union National Bank, successor by
                                    merger to Signet Bank and Registrant
                                    incorporated by reference to Exhibit
                                    10.10(c) of Registrant's Quarterly
                                    Report on Form 10-Q for the period
                                    ended March 31, 1998

                           (d)      Amendment No. 4, dated April 28, 1998,                                         *
                                    to the Amended and Restated Loan and
                                    Security Agreement between First
                                    Union National Bank, successor by
                                    merger to Signet Bank and Registrant
                                    incorporated by reference to Exhibit
                                    10.10(d) of Registrant's Quarterly
                                    Report on Form 10-Q for the period
                                    ended March 31, 1998

10.11                      Equipment Lease between General                                                         *
                           Electric Capital Corporation and
                           Registrant, dated October 24, 1996 incorporated by
                           reference to Exhibit 10(x) of Registrant's Quarterly
                           Report on Form 10-Q for the period ended September
                           30, 1996

10.12                      1996 Incentive Stock Option Plan dated                                                  *
                           May 24, 1996, incorporated by reference to Exhibit
                           10(a)(i) of Registrant's Annual Report on Form 10-K
                           for the period ended December 31, 1996

                           (a)      Amendment No. 1, dated March 15,                                               *
                                    1997, to 1996 Incentive Stock
                                    Option Plan, incorporated by
                                    reference to Exhibit 10.12(a) of
                                    Registrant's Annual Report on
                                    Form 10-K for the period ended
                                    December 31, 1997

10.13                      Stock Option Plan for Non-employee                                                      *
                           Directors, dated November 1, 1996,
                           incorporated by reference to Exhibit
                           10(a)(ii) of Registrant's Annual
                           Report on Form 10-K for the period
                           ended December 31, 1996

10.14                      Sixth Amended Employment Agreement                                                      *
                           between Vincent L. Salvatori and

                                       19

<PAGE>


                           Registrant, dated November 24, 1997, incorporated by
                           reference to Exhibit 10.14 of Registrant's Annual
                           Report on Form 10-K for the period ended December 31,
                           1997

10.15                      Third Amended Employment Agreement                                                      *
                           between Gerald F. Mayefskie and
                           Registrant, dated November 17, 1997, incorporated by
                           reference to Exhibit 10.15 of Registrant's Annual
                           Report on Form 10-K for the period ended December 31,
                           1997

10.16                      First Amendment to Deed of Lease                                                        *
                           between John Hancock Mutual Life
                           Insurance Company and the Registrant, dated December
                           31, 1997, incorporated by reference to Exhibit 10.16
                           of Registrant's Annual Report on Form 10-K for the
                           period ended December 31, 1997

10.17                      Letter of Intent between the Regis-                                                     *
                           trant and CACI International Inc.,
                           dated May 18, 1998, incorporated
                           herein by reference to Exhibit 2
                           of Registrant's Current Report on
                           Form 8-K filed on June 4, 1998

21                         Subsidiaries of the Registrant,                                                         *
                           incorporated by reference to Exhibit
                           21 of Registrant's Annual Report
                           on Form 10-K for the period ended
                           December 31, 1997

27                         Financial Data Schedule                                                                 21
</TABLE>

* Previously filed; incorporated herein by reference.


                                       20