<PAGE>
                                                    Exhibit 10.29

                    BEFORE THE ARMED SERVICES
                    BOARD OF CONTRACT APPEALS

-------------------------------------
IN THE MATTER OF THE APPEAL OF       )
                                     )
GOVERNMENT TECHNOLOGY SERVICES, INC. )   ASBCA No. 49614
                                     )
UNDER CONTRACT NO. F01620-93-D-0001  )
-------------------------------------


                      SETTLEMENT AGREEMENT
                      --------------------


     This Settlement Agreement ("Agreement") is entered into as of

this [20th] day of December, 1996, by and between Government

Technology Services, Inc. ("Appellant") and the United States of

America, Department of the Air Force ("Respondent"), acting by and

through Appellant's duly authorized Contracting Officer.



                         R E C I T A L S
                         ---------------


     WHEREAS, on February 2, 1993, Appellant and Respondent entered

into Contract No. F01620-93-D-0001 ("the Contract"), pursuant to

which Appellant agreed to provide certain microcomputer hardware,

software, services and related items to Appellant to support

general purpose applications for desktop computer needs, including

certain operating systems and office automation software;



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     WHEREAS, the Contract provided more specifically for the

purchase of Contract Line Item ("CLIN") 0001 basic systems, CLIN

0002 intermediate systems, CLIN 0003 advanced systems, CLIN 0004

open systems-common application environment, CLIN 0005 orderable

software, CLIN 0006-0009 orderable hardware, CLIN 0010-0015

user-installable components, CLIN 0016-0023 extended warranty, CLIN

0024 data, and CLIN 0025 one-time maintenance training;



     WHEREAS, GTSI proposed Microsoft Corporation ("Microsoft")

Windows Version 3.1 as the bundled operating system for CLIN 0001,

CLIN 0002 and CLIN 0003;



     WHEREAS, for office automation software for CLIN 0001, CLIN

0002, and CLIN 0003, GTSI proposed Microsoft Word for Windows 2.0,

Microsoft Excel 4.0, Microsoft PowerPoint 2.0, SPI Window Base

Version 1.5, Hinsch Time Planner, and Microsoft Communications

software included in Windows Version 3.1;



     WHEREAS, Section H-10 of the Contract provided, in pertinent

part, that for the base year and first two option periods of the

Contract all updated/upgraded versions of the software and

associated documentation was to be furnished by Appellant to the

Government without additional charge;





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     WHEREAS, Appellant's proposal leading to the Contract

(i) agreed to provide software upgrades          [*]

[*]                                    and (ii) stated that

[*]

[*]         ;



     WHEREAS, Respondent advised Appellant in August, 1995 that

Respondent believed that Appellant was required to provide Windows

95 and Office 95 software to users under the Contract as upgrades

without additional compensation;



     WHEREAS, Appellant provided to Respondent its position and the

position of Microsoft Corporation that Windows 95 and Office 95

were not upgrades under the Contract;



     WHEREAS, by letter dated November 27, 1995, Respondent issued

its Final Decision that Windows 95 and Office 95 were upgrades

under the Contract to be provided by Appellant to Respondent's

users without additional charge;



     WHEREAS, on July 31, 1996, Appellant timely filed a complaint

with the Armed Services Board of Contract Appeals, ASBCA No. 49614,

("Action") appealing the Contracting Officer's Final Decision and

seeking, among other things, a determination that Windows 95 and



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Office 95 are not "Upgrades" to be provided free of charge under

the Contract; and



     WHEREAS, the Action involves contested questions of fact and

law, and the parties now wish to compromise and settle the Action

and other specifically identified disputes between them without

further litigation:



     NOW, THEREFORE, for and in consideration of the recitals set

forth above, which are deemed substantive parts of this Settlement

Agreement, the mutual promises contained herein, the consideration

set forth below, and for other good and valuable consideration, the

receipt and sufficiency of which is hereby acknowledged, and

intending to be legally bound, Appellant and Respondent hereby

agree as follows:



     1.   Within five business days of the execution of this

Agreement by both parties, Appellant shall file with the ASBCA a

motion to dismiss the Action with prejudice.  Each party shall bear

its own costs and fees for litigating the Action, consistent with

the requirements of Federal Acquisition Regulation Part 31 and the

allowability provisions therein.







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     2.   Appellant agrees, as full resolution of its Upgrade

responsibilities under the Contract in general and under Contract

Section H-10 in particular, that Appellant will promptly provide

without charge:  (a) licenses for Windows 95 and/or Office 95

products to                      [*]

[*]                                                          ; and

(b) Windows 95 and/or Office 95 products licenses to all users of

Respondent who register under the Contract with Appellant in

writing on or before February 28, 1997, both (a) and (b) subject to

the limitations in Paragraph 3 below, and provided further that

[*]

[*]

[*]

[*]

[*]

[*]                   .



     3.   Notwithstanding any other provision in this Agreement,

the maximum number of additional licenses Appellant shall be

required to provide for those              [*]            without

additional charge under the Contract for any Upgrades/Updates of

any kind shall be up to   [*]  licenses for Windows 95 and up to

[*]    licenses for Office 95, and shall exclude any   [*]

[*]



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[*]

[*]                            .



     4.   In consideration for Respondent's agreement to resolve

this matter without protracted litigation, as well as Respondent's

agreements recited herein, Appellant agrees to release and

discharge Respondent, its employees, officials, affiliates,

representatives, successors and assigns, from any and all claims,

causes, liabilities, costs or demands at law or in equity which are

alleged in, relate to, concern, or involve the subject matter of

the Action, including but not limited to any liability of

Respondent concerning compensation to Appellant for upgrades under

the Contract.



     5.   In consideration for Appellant's agreement to resolve

this matter without protracted litigation, as well as Appellant's

agreements recited herein, Respondent agrees to release and

discharge Appellant, its employees, officers, directors,

affiliates, representatives, successors and assigns, from any and

all claims, causes, liabilities, costs or demands at law or in

equity which are alleged in, relate to, concern or involve the

Action, including but not limited to any liability of Appellant for

any additional upgrades or updates of any kind under the Contract





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in general or Section H-10 in particular, including but not limited

to Office 97 and/or Internet Explorer 4.0.



     6.   This Settlement Agreement is inclusive of, and in full

satisfaction of, all interest, attorneys' fees, and any costs

incurred by either party to the Action.  Appellant and Respondent

specifically agree that the terms of this Settlement Agreement or

any actions required by the terms of this Settlement Agreement do

not impact, waive, release, discharge or otherwise in any way

affect any claims or subsequent actions relating to any items not

covered in this Agreement.



     7.   The terms of this Settlement Agreement are contractual in

nature and are not mere recitals.  This Settlement Agreement has

been carefully read, the contents hereof are known and understood,

and it is freely signed after consultation with counsel, by all

parties hereto.  The parties agree and acknowledge that both

parties jointly drafted the terms and conditions contained in this

Settlement Agreement.  Therefore, this Settlement Agreement shall

not be construed against either party on the basis that both

parties are responsible for the drafting of any section alleged to

be ambiguous or uncertain in the event of any ambiguities or

uncertainties.





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<PAGE>
     8.   The parties acknowledge and agree that this Settlement

Agreement and the obligations it creates are the result of

compromise and are entered into in good faith, and that nothing

contained in this Settlement Agreement shall be construed as an

admission of liability or fact or as an admission against interest

by either party hereto.



     9.   The parties agree that the terms of this Agreement are

strictly confidential, and shall not be disclosed by either party

hereto except as required by law, regulation, or judicial process.



     10.  This Settlement Agreement represents and contains the

entire and only agreement and understanding with respect to the

subject matter of this Settlement Agreement, and supersedes any and

all prior and contemporaneous oral and written agreements,

understandings, representations, inducements, promises, warranty,

and conditions among the parties.



     11.  This Settlement Agreement and each of its provisions

shall become effective, valid, and binding upon the parties hereto

upon the execution and delivery by each of the parties hereto and

may be amended only in writing executed by each of the parties

hereto.





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<PAGE>
     12.  This Settlement Agreement shall be binding upon the

parties, and their successors and assigns.



     13.  Each party represents, warrants, and covenants that it

has full and complete authority and authorization to execute and

effect this Settlement Agreement and to take or cause to be taken

all acts contemplated by this Settlement Agreement.



     14.  This Settlement Agreement will be executed in two

duplicate originals each of which shall constitute an original and

all of which when taken together shall constitute but a single

agreement.


                              DEPARTMENT OF THE AIR FORCE



Dated:  /s/ 23DEC96           By:  /s/ Christine Mitchell
       ---------------            ------------------------------
                                   Christine Mitchell
                                   Contracting Officer


                              GOVERNMENT TECHNOLOGY SERVICES, INC.



Dated:  /s/ 12/20/96          By:  /s/ Paul F. Cantwell
       ---------------            ------------------------------
                                   Paul F. Cantwell
                                   Vice President,
                                   Program Management


[*]  Pursuant to Rule 24b-2, confidential material has been
     redacted and filed separately with the SEC.


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