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


               QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934


For the quarter ended September 30, 1996    Commission File Number:  2-88617

                     QUESTECH, INC.   
           (Exact name of Registrant as specified in its charter)


            Virginia                                  54-0844913
(State or other jurisdiction of
 incorporation or organization)               (I.R.S. Employer I.D. No.)


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

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

                                    ---

            (Former name, former address and former fiscal year,
                       if changed since last report)

     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.

     As of the close of business November 1, 1996, the registrant had
outstanding 1,610,953 shares of Common Stock, par value $.05 per share.



                      QuesTech, Inc. and Subsidiaries


                                 I N D E X

                             September 30, 1996



                                                            Page No.

PART I.   Financial Information

  Item 1  Financial Statements (Unaudited)

     CONDENSED CONSOLIDATED BALANCE SHEETS -
     September 30, 1996 and December 31, 1995                    2

     CONSOLIDATED STATEMENTS OF EARNINGS -
     Three Months ended September 30, 1996 and 1995;
     Nine Months ended September 30, 1996 and 1995               4

     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
     Nine Months ended September 30, 1996 and 1995               6

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -
     Nine Months ended September 30, 1996                        7

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
     September 30, 1996 and September 30, 1995                   8 

  Item 2  Management's Discussion and Analysis of
          Financial Condition and Results of Operations          9

PART II.  Other Information

  Item 1  Legal Proceedings                                     12

  Item 5  Other Information                                     12

  Item 6  Exhibits and Reports on Form 8K                       13

Officers' Signatures                                            14

     EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE



<TABLE>

                      QuesTech, Inc. and Subsidiaries
   
                   CONDENSED CONSOLIDATED BALANCE SHEETS

                                   ASSETS


                                                   Sept. 30      Dec. 31
                                                    1996           1995 
                                                 (Unaudited)      (Note)
CURRENT ASSETS
  <S>                                          <C>           <C> 
  Cash and cash equivalents ................    $   136,900   $   178,300
  Accounts receivable ......................     11,028,800     8,358,400
  Inventories ..............................        165,600        81,500
  Prepaid expenses and other ...............        634,300       225,500
  Deferred income taxes ....................        751,300       751,300

       Total current assets ................    $12,716,900   $ 9,595,000

EQUIPMENT AND LEASEHOLD IMPROVEMENTS - at 
  cost less accumulated depreciation and
  amortization of $6,789,500 and $6,531,500,
  respectively .............................      4,479,200     2,256,500

GOODWILL LESS ACCUMULATED AMORTIZATION OF
  $1,532,900 and $1,417,000, respectively ..      1,403,600     1,519,600

DEFERRED INCOME TAXES, net of valuation
  allowance of $148,000 ....................      1,218,100     1,218,100

OTHER ASSETS ...............................      2,032,200     1,834,500

  TOTAL ASSETS                                  $21,850,000   $16,423,700

</TABLE>

The accompanying notes are an integral part of these statements.

NOTE:  The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.







<TABLE>
                      QuesTech, Inc. and Subsidiaries

                   CONDENSED CONSOLIDATED BALANCE SHEETS

                    LIABILITIES AND STOCKHOLDERS' EQUITY


                                                  Sept. 30      Dec. 31
                                                    1996           1995 
                                                 (Unaudited)      (Note)
CURRENT LIABILITIES
  <S>                                           <C>           <C> 
  Line of Credit ...........................    $       --    $   394,100
  Current maturities of long-term
    obligations payable ....................        138,100        57,100
  Accounts payable .........................      5,048,400     2,268,800
  Accrued liabilities ......................      6,905,200     4,834,300
  Income taxes currently payable ...........         20,000        45,200

       Total current liabilities ...........    $12,111,700   $ 7,599,500

LONG-TERM OBLIGATIONS ......................        437,100       156,200

INDEBTEDNESS TO RELATED PARTIES ............      1,400,900     1,321,900

ACCRUED POST-RETIREMENT BENEFIT COST .......      1,309,800     1,161,000

OTHER LONG-TERM OBLIGATIONS ................      1,013,800     1,137,300

       Total Liabilities ...................    $16,273,300   $11,375,900

STOCKHOLDERS' EQUITY
  Common stock - authorized 3,000,000
      shares of $.05 par value, issued
      1,650,000 and 1,578,000 shares,
      outstanding 1,610,953 shares and
      1,568,000 shares at September 30, 1996
      and December 31, 1995, respectively ..         82,500        78,900
  Additional paid in capital ...............      2,805,600     2,720,100
  Retained earnings ........................      3,226,300     2,833,700
  Less Treasury Stock at cost ..............       <193,100>     <227,300>
  Due from SECT ............................       <344,600>     <357,600>
       Total Stockholders' Equity ..........    $ 5,576,700   $ 5,047,800

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $21,850,000   $16,423,700

</TABLE>

The accompanying notes are an integral part of these statements.
NOTE:  The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.

<TABLE>

                      QuesTech, Inc. and Subsidiaries

              CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)


                                              Three Months Ended Sept. 30,
                                                   1996          1995

<S>                                            <C>           <C>
Revenues ..................................    $20,377,600   $15,706,700

Operating expenses
  Salaries, wages and employee benefits ...      8,563,500     7,047,300
  Other operating expenses ................     11,479,000     8,055,500

        Total operating expenses ..........    $20,042,500   $15,102,800

        Income from operations ............        335,100       603,900
  Other expense ...........................            --       <299,100>
  Interest expense ........................       <131,600>     <104,300>

        Earnings before income taxes ......    $   203,500   $   200,500

Provision for income taxes ................        <89,500>     <102,400>

        Net earnings ......................    $   114,000   $    98,100


Earnings per share:

    Primary ...............................    $       .08   $       .07
    Fully diluted .........................    $       .08   $       .06

Weighted average number of common shares
  outstanding:

    Primary ...............................      1,514,753     1,428,994
    Fully diluted .........................      1,517,746     1,518,289

</TABLE>

The accompanying notes are an integral part of these statements.







<TABLE>

                      QuesTech, Inc. and Subsidiaries

              CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)


                                              Nine Months Ended Sept. 30,
                                                   1996          1995

<S>                                            <C>           <C>
Revenues ..................................    $54,718,500   $43,439,900

Operating expenses
  Salaries, wages and employee benefits ...     25,023,000    21,441,400
  Other operating expenses ................     28,624,500    20,495,700

        Total operating expenses ..........    $53,647,500   $41,937,100

        Income from operations ............      1,071,000     1,502,800

  Other expense ...........................            --       <522,100>
  Interest expense ........................       <369,900>     <291,800>

        Earnings before income taxes ......    $   701,100   $   688,900

Provision for income taxes ................       <308,500>     <351,400>

        Net earnings ......................    $   392,600   $   337,500


Earnings per share:

    Primary ...............................    $       .26   $       .24
    Fully diluted .........................    $       .26   $       .22

Weighted average number of common shares
  outstanding:

    Primary ...............................      1,516,246     1,427,708
    Fully diluted .........................      1,519,542     1,532,439

</TABLE>

The accompanying notes are an integral part of these statements.

<TABLE>

                       QuesTech, Inc. and Subsidiaries

        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                          Nine Months
                                                         Ended Sept. 30  
                                                       1996          1995
Increase <Decrease> in Cash and Cash Equivalents

Cash flows from operating activities:
<S>                                               <C>           <C>
Net Earnings .................................... $   392,600   $   337,500
Adjustments to reconcile net earnings to
  net cash provided by operating activities:
     Depreciation and amortization ..............     658,300       480,600
     Increase in fund values of non-qualifying
       assets under deferred compensation plans .    <160,100>     <135,100>
     Other accrued costs ........................         --        246,400
     Changes in assets and liabilities ..........   1,771,400       331,500
     Net cash provided by
       operating activities ..................... $ 2,662,200   $ 1,260,900

Cash flows from investment activities:
  Capital expenditures ..........................  <2,759,200>   <1,337,000>

     Net cash used in investing activities ...... $<2,759,200>  $<1,337,000>

Cash flows from financing activities:
  Increase<decrease> in Line of Credit borrowings      10,500       318,500
  Cash proceeds from exercise of stock options ..     153,600        53,400
  Treasury stock transactions ...................      34,200      <197,300>
  Repayment of long-term debt ...................     <42,700>      <38,700>
  Repayment of indebtedness to related parties ..     <43,400>     <107,700>
  Repayment of other long-term debt .............     <56,600>      <52,300>
    
     Net cash provided by/<used in>
       financing activities ..................... $    55,600   $   <24,100>

Net <decrease> in cash .......................... $   <41,400>  $  <100,200>
Cash, Beginning of period .......................     178,300       261,900

Cash, End of period ............................. $   136,900   $   161,700

     Cash payments for:
       Interest ................................. $   162,500   $   106,100
       Income taxes .............................     678,900       379,100 

The accompanying notes are an integral part of these statements.

</TABLE>

<TABLE>

                      QuesTech, Inc. and Subsidiaries

        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


                                                      Nine Months
                                                     Ended Sept. 30 
                                                   1996         1995
Common Stock issued 1,650,000 shares in 1996
  and 1,578,000 shares in 1995:
  
  <S>                                           <C>          <C> 
  Balance at January 1 ......................   $   78,900   $   78,900
  Exercise of employee stock options ........        3,600          -- 
    Balance at September 30 .................       82,500       78,900

Additional paid in capital:

  Balance at January 1 ......................    2,720,100    2,722,700
  Exercise of employee stock options ........       85,500       <1,700>
    Balance at September ....................   $2,805,600   $2,721,000

Retained Earnings:

  Balance at January 1 ......................    2,833,700    2,313,600
  Net Earnings ..............................      392,600      337,500
    Balance at September 30 .................   $3,226,300   $2,651,100

Cost of Treasury Stock:

  Balance at January 1 ......................     <227,300>     <30,000>
  Exercise of employee stock options ........       34,200     <197,300>
    Balance at September 30 .................   $ <193,100>  $ <227,300> 

Due from SECT:
  Balance at January 1 ......................   $ <357,600>  $ <432,500>
  Exercise of employee stock options ........       13,000       53,400
    Balance at September 30 .................   $ <344,600>  $ <379,100>

Total Stockholders' Equity ..................   $5,576,700   $4,844,600

</TABLE>



The accompanying notes are an integral part of these statements.




                      QuesTech, Inc. and Subsidiaries

                 Notes to Consolidated Financial Statements
                        September 30, 1996 and 1995
                                (Unaudited)


Basis of Presentation

     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 reflect all necessary adjustments and reclassifications that are
necessary for fair presentation for the periods presented.  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.  The results of operations for the three and nine-month periods
ended September 30, 1996, are not necessarily indicative of the results to
be expected for the full year.

     Certain portions of the 10-Q include forward looking statements within
the meaning of Section 27(a) of the Securities Act of 1933, as amended, and
Section 21(e) of the Securities Exchange Act of 1934, as amended.  Although
management believes that the expectations reflected in certain forward
looking statements contained in the Management's Discussion and Analysis are
based upon reasonable assumptions, it can give no assurance that its
expectations will be realized.

Inventories

     Inventories at September 30, 1996 consist of raw materials (plastics)
and finished goods.  Valuation is based on the lower of cost or market,
determined by the use of the first-in, first-out method.

Earnings Per Share

     Per share earnings are calculated based on weighted average shares.  
Dilutive common stock equivalents consist of previously granted stock
options, with exercise prices between $4.00 and $7.00 per share.  As of
September 30, 1996, the closing bid price of the stock was $7.50 per share.
Shares held in the Company's Stock Employee Compensation Trust (SECT),
although outstanding, are excluded from the base of the earnings per share.

Statement of Cash Flows

     For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.


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


RESULTS OF OPERATIONS

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

<TABLE>

                                                   Nine Months Ended
                                                        Sept. 30    
                                                   1996         1995

<S>                                               <C>          <C>
Revenues                                          100.00%      100.00%
Operating Expenses                                 98.04        96.54

Income from operations                              1.96%        3.46%
Other Expense                                         --        <1.20>
Interest                                            <.68>        <.67>
Provision for income taxes                          <.56>        <.81>

     Net Earnings                                    .72%         .78%

</TABLE>

     For the quarter ended September 30, 1996, the Company's revenues were
$20.4  million, up by $4.7 million or 30% over 1995.  Revenues for the first
nine months of the year were $54.7 million, up $11.3 million or 26% over
last year.  Increased activity from the Company's largest contract which
commenced performance this year accounted for half of the revenue growth
within the government contract segment.  Record revenue growth from
government contracts as a whole offset a third quarter slowdown in sales at
QuesTech Packaging, Inc. ("QTPI"), the Company's commercial packaging
segment.  QTPI scaled back its production of monolayer infant bottle liners,
pending a resolution of a contract dispute with its customer, Munchkin, Inc. 
Currently, QTPI is discussing the possible production of several new
products with a number of Fortune 500 companies.  Any sales arising from
such production will commence no sooner than 1997.

     Operating expenses were $20 million for the quarter and $53.6 million
for the nine months ended September 30, 1996, up 33% and 28%, respectively
when compared with the same periods in 1995.  The increase in operating
expenses was driven by contract requirements for additional staff,
subcontracts, and material procurements to support newly issued delivery
orders.  The costs of maintaining the packaging operation were $2.2 million
during the nine-month period.

     Despite positive margins on its major contracts, the Company's income
from operations declined by 44.5% during the quarter and 28.7% during the
nine-month period.  Operating margins were impacted by losses arising from
QTPI's initial high manufacturing costs resulting from production start-up
and unfilled sales orders during September 1996.  QTPI's operating loss as
of September 30, 1996, was approximately $1.6 million, up from $1.0 million
for the same period last year.

     Interest expense increased as the Company borrowed heavily from its
line of credit ("LOC") to finance QTPI's capital and operating requirements. 
A significant portion of the interest cost associated with the construction
in progress at the Newport News plant facility was incurred during the third
quarter and charged to expense.

     The Company's pre-tax earnings for the quarter were $203,500 which
remained at about the same level as last year.  Pretax earnings for the nine
month period reflected a 1.8% increase, from $688,900 to $701,100.

     Fully diluted earnings per share for the quarter were $.08 and $.26 for
the nine-month period, up $.02 and $.04, respectively over 1995.  The
dilution of shares resulted from the impact of currently outstanding stock
options and small common stock issues to fund the exercise of previously
granted stock options.

LIQUIDITY AND SOURCES OF CAPITAL

     The following table sets forth certain financial data with respect to
changes in the Company's liquidity and capital resources since December 31,
1995 (in thousands of dollars, except working capital ratio):

<TABLE>

                             9/30/96       12/31/95      NET CHANGES

<S>                          <C>           <C>              <C>
Working capital              $   605       $1,995           $<1,390>     
Current assets                12,717        9,595             3,122
Current liabilities           12,112        7,600             4,512
Working capital ratio (1)       1.05         1.26              <.21>

</TABLE>

(1)  Current assets over current liabilities.

     During the nine months ended September 30, 1996, the Company drew from
its line of credit to finance QTPI's construction in progress costs which
increased by $2.3 million over last year.  Additionally, the Company infused
cash into QTPI's operations to fund its pre-tax losses which amounted to
$1.6 million.  An additional outlay of $.5 million was incurred to provide
new personal computers and permit facility improvements in support of the
growth in the government contracts segment.

     Subsequent to the date of the financial statements, the Company
executed a capital lease agreement with General Electric Capital Corporation
to finance certain of QTPI's machines.  As a result, the Company received $2
million in cash, which was used to pay down its line of credit.  At
September 30, 1996, the LOC position was approximately $.4 million.  Of this
amount, $80,000 was reported under current maturities and the remainder was
included in the Long-Term Obligations of the financial statements to reflect
the partial impact of the financing.  The LOC balance, which typically
ranged from $1.5 million to $2.0 million during the first nine months, is
expected to decline by 50% during the fourth quarter.

     Working capital requirements of the core business will increase as a
result of commitments to subcontractors and materials expenditures, up 50%
over last year.  Additionally, funds will be spent to cover the relocation
costs of certain staff, following the closure of the Vint Hill Farms
Station, a U.S. Army base.  Within QTPI, pre-tax losses will reach $2
million by year-end.  These losses stem in part from delays in reaching full
production capacity and unanticipated results of a pricing agreement entered
into prior to the commencement of production.  Capital investment towards
facilities expansion, accounting and information systems, and manufacturing
equipment combined is expected to reach $3 million by year-end.  Management
believes that its financial resources, including its LOC facility, and
proceeds from the recently negotiated capital lease and internally generated
funds, are adequate to meet its foreseeable needs.

INFLATION

     The impact of inflation on the Company's costs should be minimal due to
the fact that increased costs of this type are normally included in the
pricing structure or otherwise recovered through reimbursement of contract
costs incurred.

BACKLOG

     The term "backlog" includes the aggregate contract revenues remaining
to be earned at the stated time, to the extent of the value of the
underlying contract award.  Virtually all of the Company's backlog is
expected to be completed within five years.  The following table reflects
the Company's funded and unfunded backlog as of September 30, 1996 and
September 30, 1995.

<TABLE>

                Funded Backlog                 Unfunded Backlog
                 September 30                    September 30
              1996          1995              1996          1995

          <C>           <C>              <C>           <C>
          $38,837,400   $28,937,600      $389,387,500  $460,020,700

</TABLE>

The term "funded" refers to that portion of aggregate contract revenues
remaining to be earned which is covered by funding appropriations and
allotments to the contract by the procuring agency.  The term "unfunded"
refers to the excess of the value of the contract award over the funded
value.  Management does not provide any assurance that its customers will
authorize funding amounts in addition to funding commitments existing as of
the period just ended.



                                  PART II


Item 1.  Legal Proceedings

     Litigation-- 7600 Limited Partnership and Guy Beatty v. QuesTech, Inc., 
 In January 1996, the Company was named as a defendant in a lawsuit filed by
its former landlord and the general partner of the landlord.  The case
originally sought damages for breach of contract in the form of previously
incurred attorneys' fees,  plus five tort claims, three of which have been
dismissed to date.  The Company's counsel believes that the Company's
position with regard to   the two remaining tort claims has merit.  The
Company's general liability insurer has taken responsibility for the cost of
the basic defense of the entire case.  The Company has retained additional
outside counsel at the Company's cost.  Subject to a reservation of rights
issued by the insurer, the insurer should be liable for damages.  The case
is scheduled for trial in March 1997.  Management does not provide any
assurance on the outcome of the case.


Item 5.  Other Information

     Contract Dispute-- QTPI, the Company's manufacturing subsidiary,  has
exchanged letters with its exclusive distributor of monolayer infant bottle
liners regarding issues of contract interpretation, specifications and
warranty.  In October 1996, QTPI temporarily reduced its workforce and
limited production of liners.





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

(a)  Exhibits:

     10.  Material Contracts

          (s) Equipment Lease Agreement between General Electric Capital
          Corporation and QuesTech Packaging, Inc. and QuesTech, Inc. dated
          October 24, 1996.

     ll.  Statement of Computation of Earnings Per Share.

(b)  Reports on Form 8-K:

          No reports on Form 8-K were required to be filed during the third
          quarter of 1996.                       S.E.C. FORM 10-Q

                             September 30, 1996


     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:  ______________________           ________________________________
                                          Vincent L. Salvatori 
                                          Chairman of the Board and
                                          Chief Executive Officer



Date:  ______________________           ________________________________
                                          Joseph P. O'Connell, Jr.
                                          Vice President and
                                          Chief Financial Officer