UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
                               FORM 10-K
(Mark One)

(X)    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [FEE REQUIRED]

       For the fiscal year ended                     December 31, 1995

                                   OR

( )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

       For the transition period from              to

       Commission file number       1-3879

                                 DynCorp
           (Exact name of registrant as specified in its charter)

            Delaware                           36-2408747

   (State or other jurisdiction of    (I.R.S. Identification No.)
    incorporation or organization)

         2000 Edmund Halley Drive, Reston, VA          22091-3436
       (Address of principal executive offices)        (Zip Code)

  Registrant's telephone number, including area code (703) 264-0330

  Securities registered pursuant to Section 12(b) of the Act:

  Title of each class           Name of each exchange on which registered
          None                                     None

  Securities registered pursuant to Section 12(g) of the Act:

  17% Redeemable Pay-In-Kind Class A Preferred Stock, par value $0.10 per share
                            (Title of class)

           16% Pay-In-Kind Junior Subordinated Debentures due 2003
                            (Title of class)

   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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.  [X]

   State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. The registrant's voting stock is not
publicly traded; therefore the aggregate market value of the 2.4% of
outstanding voting stock held by nonaffiliates is not available.

   Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.  8,024,645 shares of common stock having a par value of $0.10
per share were outstanding March 08, 1996.


                           TABLE OF CONTENTS
                             1995 FORM 10-K

       Item

       Part I

   1.  Business
   2.  Properties
   3.  Legal Proceedings
   4.  Submission of Matters to a Vote of Security Holders

       Part II

   5.  Market for the Registrant's Common Stock and Related Stockholder Matters
   6.  Selected Financial Data
   7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations
   8.  Financial Statements and Supplementary Data
       Report of Independent Public Accountants
       Financial Statements
         Consolidated Balance Sheets
           Assets
           Liabilities, Redeemable Common Stock and Stockholders' Accounts
         Consolidated Statements of Operations
         Consolidated Statements of Stockholders' Accounts
         Consolidated Statements of Cash Flows
       Notes to Consolidated Financial Statements
   9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosures

       Part III

   10. Directors and Executive Officers of the Registrant
   11. Executive Compensation
   12. Security Ownership of Certain Beneficial Owners and Management
   13. Certain Relationships and Related Transactions

       Part IV

   14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K


                                 PART I

   ITEM 1. BUSINESS

   General Information

       The Company provides diversified management, technical and
   professional services to primarily government customers
   throughout the United States and internationally.  Generally,
   these services are provided under written contracts which may be
   fixed-price, time-and-material or cost-type  depending on the
   work requirements and other individual circumstances.

       The Company provides services to all branches of the
   Department of Defense and to NASA, the Department of State, the
   Department of Energy, the Environmental Protection Agency, the
   Postal Service and other U.S., state and local government
   agencies and foreign governments.  These services encompass a
   wide range of management, technical and professional services
   covering the following areas:

       Information and Engineering Technology includes software
       development and maintenance, computer center operations, data
       processing and analysis, database administration,
       telecommunications support and operations, maintenance and
       operation of integrated electronic systems and networking of
       electronic systems in a local and wide area environment.
       Also included are environmental regulation development,
       quality assurance studies and research, management of
       information relating to the proper handling of hazardous
       materials and substances, alternative energy research and
       evaluation, and energy security studies and assessments.
       Additionally, this unit provides services in support of
       nuclear safeguards and security research and development.
       Specialized disciplines include the development of physical
       security systems, vulnerability and risk assessments, and
       human reliability.

       Aerospace Technology includes engineering, maintenance,
       modification, operational and logistical support of military
       aircraft; technical and evaluation services at test and
       training ranges; engineering, manufacturing and installation
       of aircraft system upgrades; structural repairs that extend
       airframe life for the aging fleet of military aircraft;
       ground based logistical support and staff augmentation; and
       engineering and technical services for high-technology space
       and missile systems programs.

       Enterprise Management includes the operation, maintenance and
       management of major governmental enterprises and
       installations, ranging from the turnkey responsibility for
       operation of all aspects of a single base (such as a military
       installation) to assumption of responsibility for the
       staffing of particular functions at various locations for a
       single customer.  Disciplines included within operational
       responsibility vary, but generally include scientific
       support, operation of sophisticated electronic and mechanical
       systems, construction and demolition, environmental
       remediation and the handling of and accountability for
       inventories of equipment and materials/supplies and other
       property.  Also included are testing and evaluation of
       military hardware systems at government test ranges,
       collection and processing of data, maintenance of targets,
       ranges and laboratory facilities, developmental testing of
       complex weapon systems, security systems work and technology
       transfer into commercial applications.

   Industry Segments

       The Company has one line of business, which is to provide
   management, technical and professional services to primarily
   government organizations in support of the customers' operations
   or facilities.

   Backlog

       The Company's backlog of business (including estimated value
   of option years on government contracts) was $2.887 billion at
   the close of 1995, compared to a year-end 1994 backlog of $2.011
   billion.  Of the total backlog at December 31, 1995, $2.029
   billion is expected to produce revenues after 1996.

       Contracts with the U.S. Government are generally written for
   periods of three to five years.  Because of appropriation
   limitations in the federal budget process, firm funding is
   usually made for only one year at a time, with the remainder of
   the years under the contract expressed as a series of one-year
   options.  The Company's experience has been that the Government
   generally exercises these options.  U.S. Government contracts
   contain standard provisions for termination at the convenience of
   the U.S. Government, pursuant to which the Company is generally
   entitled to recover costs incurred, settlement expenses, and
   profit on work completed to termination.

   Competition

       The markets which the Company services are highly
   competitive.  In each of its operating areas, the Company's
   competition is quite fragmented, with no single competitor
   holding a significant market position.  Some of the Company's
   competitors are large, diversified firms with substantially
   greater financial resources and larger technical staffs than the
   Company has available to it.  Government agencies also compete
   with and are potential competitors of the Company because they
   can utilize their internal resources to perform certain types of
   services that might otherwise be performed by the Company.

   Foreign Operations

       The Company has a minority investment in an unaffiliated
   company in Saudi Arabia.  Discussions are underway regarding the
   sale of the Company's minority interest to one or more of the
   other Saudi stockholders.  In addition, the Company in 1993
   established operations in Mexico.  None of these foreign
   operations is normally material to the Company's financial
   position or results of operations; however, in 1995 the Company's
   Mexican operations incurred a loss of $4.4 million (see Management's
   Discussion and Analysis of Cost of Services/Gross Margin). The Company
   is currently evaluating whether it will continue its Mexican operations.

       Other activities of the Company presently include the
   providing of services in foreign countries under contracts with
   the U.S. Government, the United Nations, and other foreign
   customers.

       The risks associated with the Company's foreign operations in
   regard to foreign currency fluctuation, and political and
   economic conditions in foreign countries, are not significant.

   Incorporation

       The Company was incorporated in Delaware in 1946.

   Employees

       The Company had approximately 16,900 employees at December
   31, 1995.

   ITEM 2. PROPERTIES

       The Company is primarily a service-oriented company, and, as
   such, the ownership or leasing of real property is an activity
   which is not material to an understanding of the Company's
   operations.  The Company owns two office buildings.  The Company
   leases numerous commercial facilities used in connection with the
   various services rendered to its customers, including its
   corporate headquarters, a 149,000 square foot facility under a
   12-year lease.  None of the properties is unique.  All of the
   Company's owned facilities are located within the United States.
   In the opinion of management, the facilities employed by the
   Company are adequate for the present needs of the business.

   ITEM 3. LEGAL PROCEEDINGS

       This item is incorporated herein by reference to Note 20 to
   the Consolidated Financial Statements included elsewhere in this
   Annual Report on Form 10-K.

   ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       An annual meeting of stockholders was held on October 31,
   1995.  Dan R. Bannister and David L. Reichardt were re-elected to
   three-year terms as Class I Directors.  The other Directors who
   continued in office after the election were T. Eugene Blanchard,
   Russell E. Dougherty, Paul V. Lombardi, Dudley C. Mecum II, and
   Herbert S. Winokur, Jr.

       At the meeting, the stockholders also approved an amendment
   of the Amended and Restated Certificate of Incorporation, which
   deleted the former Class A and Class B Preferred Stock as
   authorized classes of stock and increased the authorized number
   of shares of Common Stock from 15 million to 20 million shares;
   approved the 1995 Employee Stock Purchase Plan, whereby employees
   may purchase stock on the Company-sponsored internal stock market
   at a 5% discount; approved the 1996 Executive Incentive Plan,
   under which 25% of the amount of bonuses earned are to be paid in
   the form of shares of Common Stock; and approved the 1995 Stock
   Option Plan.  The votes on such matters were as follows:

   Matter                                For     Against  Withheld  Abstained
   Election of Class I Directors
       Dan R. Bannister               7,872,944            473,713
       David L. Reichardt             7,925,083            421,574
   Amendment of Certificate of        7,282,922   683,742             379,992
     Incorporation
   Approval of Employee               7,489,337   591,644             265,676
     Stock Purchase Plan
   Approval of Executive              6,313,662 1,565,037             467,958
     Incentive Plan
   Approval of Stock Option Plan      7,129,888   859,376             357,392

   Because none of the Company's voting stock is held in "street
   name", there are no "broker non-votes".

                                PART II

   ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
   STOCKHOLDER MATTERS

       DynCorp's common stock is not publicly traded.  There were
   approximately 420 record holders of DynCorp common stock at
   December 31, 1995.  In addition, the DynCorp Employee Stock
   Ownership Plan Trust owns stock on behalf of approximately 31,000
   present and former employees of the Company.  Cash dividends have
   not been paid on the common stock since 1988.


   ITEM 6. SELECTED FINANCIAL DATA

      The following table presents summary selected historical
   financial data derived from the Consolidated Financial Statements
   of the Company, which have been audited by Arthur Andersen LLP
   for each of the five years.  During the periods presented, the
   Company paid no cash dividends on its Common Stock.  The
   following information should be read in conjunction with
   "Management's Discussion and Analysis of Financial Condition and
   Results of Operations" and the Consolidated Financial Statements
   and related notes thereto, included elsewhere in this Annual
   Report on Form 10-K.  (Dollars in thousands except per share
   data.)

<TABLE>
<CAPTION>
                                                               Years Ended December 31,
                                                1995(b)  1994(a)(d) 1993(a)(e)  1992(a)(f)   1991(a)
<S>                                            <C>        <C>       <C>         <C>         <C>
Statement of Operations Data:
Revenues                                       $908,725   $818,683   $777,216   $728,244    $654,710
Cost of services                               $871,471   $783,095   $742,455   $707,905    $634,126
Gross Profit                                   $ 37,254   $ 35,588   $ 34,761   $ 20,339    $ 20,584
Selling and corporate administrative           $ 18,705   $ 16,887   $ 17,547   $ 18,503    $ 15,538
Interest expense                               $ 14,856   $ 14,903   $ 14,777   $ 14,629    $ 12,135
Earnings (loss) from continuing
operations before extraordinary item (c)       $  5,274   $   (352)  $ (4,485)  $(14,112)  $  (7,568)

Net earnings (loss)                            $  2,368   $(12,831)  $(13,414)  $(23,342)  $ (12,403)
Common stockholders' share of earnings (loss)  $    453   $(14,437)  $(14,761)  $(25,430)  $ (18,530)
Earnings (loss) per share from continuing
  operations before extraordinary
  item for common stockholders                 $   0.27   $  (0.29)  $  (1.13)  $  (3.18)   $  (2.90)


Balance Sheet Data:
Total assets                                   $375,490   $396,000   $360,103   $338,135    $298,725
Long-term debt excluding current maturities    $104,112   $230,444   $215,939   $198,770    $119,949
Redeemable preferred stock                     $      -   $      -   $      -   $      -    $ 24,884
Redeemable common stock                        $129,843   $121,170   $ 89,996   $ 85,450    $ 81,848


<FN>
     (a) Restated for the discontinuance of the Commercial Aviation business.
     (b) 1995 included $7,707,000 reversal of income tax reserves (see Note 14),
         $4,362,000 accrued for losses and reserves related to the Company's Mexican
         operation, $2,400,000 accrual of legal fees related to the defense of a
         lawsuit filed by a subcontractor of a former electrical contracting
         subsidiary (see Notes 13 and 20) and $5,300,000 accrued for
         uninsured costs related to a former subsidiary's use of asbestos products (see Notes 13 and 20).
     (c) The extraordinary loss in 1995 of $2,886,000 and 1992 of $2,526,000 and the gain
         in 1991 of $192,000 results from the early extinguishment of debt.
     (d) 1994 includes $3,250,000 (see Note 13) write-off of investment in unconsolidated
         subsidiary, $2,665,000 (Notes 13 and 20) accrual of legal fees related to
         the defense of a lawsuit filed by a subcontractor of a former electrical contracting
         subsidiary, $1,830,000 (see Note 13) credit for reversal of legal costs associated
         with an acquired business and $4,069,000 (see Note 14) reversal of income tax
         reserves.
     (e) 1993 includes $2,000,000 of legal and other expenses associated with an acquired
         business (see Note 13). 1993 also includes $988,000 accelerated amortization
         of costs in excess of net assets of an acquired business, for assets that were
         subsequently determined to have been overvalued at the time of acquisition.
     (f) 1992 Cost of Services includes approximately $6,000,000 for settlement of
         claims against the Company related to prior years.
</TABLE>

      ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
   CONDITION AND RESULTS OF OPERATIONS

   Overview

      In June 1995, the Company's Board of Directors concluded that
   it was in the best interests of the Company to divest its
   Commercial Aviation business.  On June 30, 1995, the Company sold
   the stock of all its subsidiaries engaged in the business of
   commercial aircraft heavy maintenance for $13.7 million to
   Sabreliner Corporation.  On August 31, 1995 the Company sold to
   ALPHA Airports Group Plc, all of its subsidiaries engaged in
   commercial airline ground handling, passenger services, aircraft
   fueling, aircraft line maintenance and cargo handling for $122
   million (subject to adjustment).  As a result of the decision to
   divest itself of the entire Commercial Aviation Business, which
   constituted a major class of customer, the related accounts have
   been classified as discontinued operations for financial
   reporting purposes.  See Note 2, "Discontinued Operations" to the
   Consolidated Financial Statements.  The following discussion and
   amounts exclude the discontinued operations of the Commercial
   Aviation Business unless stated otherwise.

        Following is a summary of operations, cash flow and long-
   term debt (in thousands):

                                                      Years Ended December 31,
                                                     1995        1994      1993

   Operations
   Revenues                                     $ 908,725    $818,683  $777,216
   Gross Profit                                    37,254      35,588    34,761
   Selling and corporate administrative           (18,705)    (16,887)  (17,547)
   Interest, net                                  (11,052)    (12,505)  (12,349)
   Other                                          (10,058)     (7,654)   (7,109)
   Provision (benefit) for income taxes            (9,090)     (2,236)    1,289
   Earnings (loss) from continuing
     operations before minority interest
     and extraordinary item                     $   6,529    $    778  $ (3,533)

   Cash Flow
   Net earnings (loss)                          $   2,368    $(12,831) $(13,414)
   Depreciation and amortization                   11,348      16,340    13,151
   Pay-in-kind interest                                 -       8,787     6,676
   Working capital items                          (16,293)    (26,216)  (12,544)
   Other                                           16,321         511     3,207
   Discontinued operations                         (3,355)     22,770    11,273
   Cash provided by operating activities           10,389       9,361     8,349
   Investing activities                           139,939     (22,235)  (18,527)
   Financing activities                          (126,915)      8,840     7,817
   Increase (decrease) in cash and
     short-term investments                     $  23,413    $ (4,034) $ (2,361)


                                                           December 31,
                                                     1995        1994    1993
   Long-term Debt (including current maturities)
   Contract Receivable Collateralized Notes     $ 100,000    $100,000  $100,000
   Junior Subordinated Debentures                      -      102,658    86,947
   Mortgages payable                                3,802      22,285    23,416
   Other notes payable and
     capitalized leases                             1,570       8,505     8,785
                                                $ 105,372    $233,448  $219,148

   Revenues - Revenues from continuing operations were $908.7
   million in 1995 compared to $818.7 million in 1994, an increase
   of $90.0 million (11.0%).  The increase in revenue was primarily
   attributable to businesses acquired in October 1994 ($46.9
   million) and new contract awards or contracts which were in the
   start-up phase in 1994 but were fully operational in 1995 ($127.0
   million).  These increases were offset primarily by declines from
   contracts lost in recompetition and reduced level of effort on
   existing contracts and also due to the shutdown of the Federal
   Government in November and December, 1995 and the subsequent
   furloughs resulting from stalled federal budget negotiations.

      Revenues from continuing operations were $818.7 million in
   1994 compared to $777.2 million in 1993, an increase of $41.5
   million (5.3%).  The increase in revenue was primarily
   attributable to businesses acquired in November and December 1993
   and October 1994 ($52.5 million), new contract awards or
   contracts which were in the start-up phase in 1993 but were fully
   operational in 1994 ($73.3 million) and a retroactive adjustment
   on one contract for wage increases mandated by the Department of
   Labor under the Service Contract Act ($7.0 million).  These
   increases were offset by declines from contracts lost in
   recompetition and reduced level of effort on existing contracts.

   Cost of Services/Gross Margins - Cost of services from continuing
   operations was 95.9% of revenue in 1995, 95.7% in 1994 and 95.5%
   in 1993, which resulted in gross margins of $37.3 million (4.1%),
   $35.6 million (4.3%) and $34.8 million (4.5%), respectively.  The
   1995 gross margin was adversely affected by losses of $4.4 million
   in connection with the Company's effort to further expand its
   Mexican operations and to complete a contract for the design and installation
   of a large security system in Mexico. These losses included such expenses as
   business development and marketing expenses, currency devaluation
   losses, a reserve for completion of the security system contract
   and severance costs associated with the reduction and realignment of the
   local workforce.  The loss incurred by the Mexican operations along with the
   effect of the shutdown of the Federal Government in November and again
   in December substantially offset increased earnings from an acquisition
   which was consumated in October 1994 and new contract awards net
   of contract losses.

      The increase in the 1994 gross margin over 1993 was attributable
   primarily to acquisitions consummated in November and December, 1993 and
   October, 1994, and new contract awards which were partially
   offset by decreases related to lost contracts and reduced level
   of services on existing contracts.

   Selling and Corporate Administrative - Selling and corporate
   administrative expenses as a percentage of revenue was 2.1% in
   1995 and 1994 and 2.3% in 1993. Even though selling and corporate
   administrative expenses as a percentage of revenue remained the
   same in 1995 as in 1994, the dollar amount increased $1.8 million
   over 1994.  This increase is primarily attributable to increased
   facility costs resulting from the sale and leaseback of the
   Corporate headquarters building at a cost in excess of the
   previous cost of ownership.  The decrease of $0.7 million in 1994
   from 1993 was primarily attributable to a decrease in Restricted
   Stock Plan expense due to the award of fewer shares in 1994 than in 1993.

   Interest - Interest expense in 1995 was $14.9 million, virtually
   unchanged from 1994. However, there were different factors
   affecting the amount of interest expense for these years.  1995
   included the effect of the declining balance and eventual
   redemption of all the 16% Junior Subordinated Debentures and the
   liquidation of the mortgage on the Corporate office building,
   which was sold and leased back; 1994 included nonrecurring
   credits resulting from the reversal of interest accruals due to a
   favorable settlement with the Internal Revenue Service of the
   Company's tax liability for the period 1985-1988.

      Interest expense was $14.9 million in 1994, compared to $14.8
   million in 1993.  Increases resulting from the compounding of the
   pay-in-kind interest on the Junior Subordinated Debentures and
   the inclusion of a full year of interest on mortgages assumed in
   conjunction with an acquisition in the fourth quarter of 1993
   were offset by the reversal of interest accruals related to the
   Company's tax liability, referred to previously.

      Interest income was $3.8 million in 1995, up from $2.4 million
   in 1994.  The increase, due to greater interest yields on higher
   cash and short-term investment balances, was partially offset by
   the collection of the 17% Cummings Point Industries, Inc. note
   receivable in August, 1995.

      Interest income in 1994 was approximately the same as that of
   1993.  Although the interest on the Cummings Point Industries,
   Inc. note receivable was higher in 1994 than 1993 because of
   compounding, 1993 included the recording of prior years' interest
   income (and offsetting bank fee expense) on cash balances in
   various operating accounts.

   Other - The increase in other expense in 1995 as compared to 1994
   is due to several different factors (see Note 13 to the Consolidated
   Financial Statements). In 1995, the Company recorded a charge of
   $5.3 million to increase its reserve for the estimated future
   uninsured costs to defend and settle asbestos claims (see Note 20(a)
   to the Consolidated Financial Statements). In addition, in 1995, 1994 and
   1993, the Company recorded charges of $2.4 million, $2.7 million and $0.5
   million, respectively, to increase its reserves for the estimated
   costs (primarily legal defense) to resolve a lawsuit filed by a
   subcontractor to a former subsidiary (see Note 20(b) to the
   Consolidated Financial Statements). The determination of these
   reserves is subject to numerous uncertainties and judgements which are
   described in Note 20(a) and (b) and it is possible that additional reserves
   may be required in the future.

      Other expense in 1994 as compared to 1993 contained several
   variances:  (i) the 1994 write-off of $3.3 million of the Company's
   50.1% investment in an unconsolidated subsidiary, (ii) accrual of
   legal fees and environmental costs related to divested
   businesses, (iii) reversal of reserves of $1.8 million for legal
   and other expenses associated with events which predated the
   Company's acquisition of another business and (iv) nonrecurrence of
   accelerated amortization of $1.0 million of cost in excess of net
   assets of an acquired business that was determined in 1993 to be
   overvalued.  See Note 13, "Other Expense," to the Consolidated
   Financial Statements.

   Income Taxes - The benefit for income taxes in 1995 reflects a
   tax provision based on an estimated annual effective tax rate,
   excluding expenses not deductible for tax and the reversal of
   $7.7 million of tax valuation reserves for deferred tax assets which
   are now expected to be used in the 1995 tax return. The 1994 federal
   tax benefit resulted from the reversal of tax reserves for the IRS
   examination and the benefit for operating losses, net of a valuation
   allowance, less the federal tax provision of a majority owned
   subsidiary required to file a separate return. The Federal tax provision
   recognized in 1993 was only that of the majority owned subsidiary
   referred to previously.

   Intangible Assets -- Intangible assets principally consist of the
   excess of the acquisition cost over the fair value of the net
   tangible assets of businesses acquired.  In accordance with the
   guidance provided in APB No. 16, the Company assesses and
   allocates, to the extent possible, excess acquisition price to
   identifiable intangible assets and any residual is considered
   goodwill.  A large portion of the intangible assets is goodwill
   which resulted from the 1988 LBO and merger, accounted for as a
   purchase, and represents the existing technical capabilities,
   customer relationships and ongoing business reputation that had
   been developed over a significant period of time.  The Company
   believes that these relationships and the value of the Company's
   business reputation were and continue to be long-term intangible
   assets with an almost infinite life.  Since the APB No. 17
   limitation is 40 years, this period is used for amortization
   purposes for the majority of the goodwill.  The value assigned to
   identifiable intangible assets at the time of the LBO and merger
   in 1988 was amortized over applicable estimated useful lives and
   was fully amortized as of December 31, 1994.

   Working Capital and Cash Flow

        Working capital at December 31, 1995 was $64.7 million
   compared to $85.1 million at December, 1994, a decrease of $20.4
   million.  This decrease resulted from increased Federal income
   tax liability (payable in March, 1996), a decrease in net assets
   of discontinued operations and an offsetting increase in
   restricted cash, all of which were attributable to the sale of
   the Commercial Aviation business.  The ratio of current assets to
   current liabilities at December 31, 1995 was 1.42 compared to
   1.70 at December 31, 1994.

        At December 31, 1995, $113.6 million of accounts receivable
   are restricted as collateral for the Contract Receivable
   Collateralized Notes (the "Notes").  Additionally, $3.0 million
   of cash is restricted as collateral for the Notes and $6.2
   million of cash is restricted as collateral for letters of credit
   required for certain contracts, most with terms of from three to
   five years.  This restricted cash has been included in Other
   Assets on the balance sheet at December 31, 1995.  To conform
   with the current period presentation, restricted cash of $3.0
   million and $2.9 million representing collateral for the Notes
   and letters of credit, respectively, has been reclassified to
   Other Assets at December 31, 1994.

        Cash provided by continuing operations was $13.8 million in
   1995 compared to cash used of $1.0 million in 1994.  Numerous factors
   contributed to the change:  (i) payment in cash of accrued
   interest on the 16% Subordinated Debentures in 1995 as opposed to payment
   in kind in 1994, (ii) a $15.2 million increase in earnings and
   (iii) a $6.9 million increase in accounts receivable.  Current
   liabilities increased due to the accrual of income tax liability
   resulting from the gain on the sale of the Commercial Aviation
   business.  For the year 1994, continuing operations used $1.0
   million of cash compared to cash provided of $6.0 million in
   1993.  The deterioration from 1993 to 1994 was primarily due to
   an increase in accounts receivable attributable to delays and
   interruptions in the usual billing and collection procedures.
   This decrease in cash from operations was partially offset by
   increased non-cash amortization and pay-in-kind interest as well
   as a reduction in net loss.

        The proceeds from the sale of the Commercial Aviation
   business, the sale/leaseback of the Corporate headquarters
   facility and the collection of the Cummings Point Industries,
   Inc. note receivable all contributed to the $139.9 million of
   funds provided from investing activities in 1995.  For the year
   1994, investing activities used $22.2 million of cash, of which
   $14.3 million was used for the acquisition of businesses and
   another $3.7 million was used for the purchase of property and
   equipment.  For the year 1993, investing activities used $18.5
   million of cash which included $10.9 million for acquisitions of
   businesses and $3.6 million for the purchase of property and
   equipment.

        The $126.9 million use of funds from financing activities in
   1995 substantially consisted of the utilization of the proceeds
   referred to previously to redeem $106.0 million of 16% Junior
   Subordinated Debentures, to extinguish the mortgage on the
   Corporate headquarters, and to purchase treasury shares.  These
   uses were partially offset by funds provided from sale of stock
   to the ESOP of $17.5 million.  For the year 1994, financing
   activities provided cash of $8.8 million.  The sale of stock to
   the ESOP contributed $17.1 million of cash of which $4.5 million
   was used for payments on indebtedness, and $3.2 million was used
   to purchase treasury stock.  For the year 1993, financing
   activities provided cash of $7.8 million.  Payments of $16.1
   million were received on the loan to the ESOP, $5.8 million was
   used for payments on indebtedness and $2.0 million was used to
   purchase treasury stock.  The treasury stock purchases were
   primarily to meet ERISA requirements to repurchase ESOP shares.

   Liquidity and Capital Resources

        At December 31, 1995, the Company's debt totaled $105.4
   million compared to $233.4 million at December 31, 1994 and
   $219.1 million at December 31, 1993.  The decrease in debt from
   December 31, 1994 to December 31, 1995 resulted from the
   redemption of $106.0 million of Junior Subordinated Debentures
   and the liquidation of the $18.2 million mortgage on the
   Company's headquarters building. The funds used for the
   liquidation of debt were obtained from the sale of the Commercial
   Aviation business, the sale/leaseback of the Company's
   headquarters building and the collection of the Cummings Point
   Industries, Inc. note receivable.  The increase in debt for 1994
   and 1993 resulted principally from the pay-in-kind interest on
   the Junior Subordinated Debentures.

        The Company had an increase in cash and short-term
   investments of $23.4 million from December 31, 1994 to December
   31, 1995, which resulted primarily from the aforementioned
   transactions.  The Company had a net decrease in cash and short-
   term investments of $4.0 million and $2.4 million in 1994 and
   1993, respectively.  The decrease for 1994 was caused to a large
   degree by net investments in acquired businesses of $14.3 million
   and an increase in accounts receivable and contracts in process
   of $22.5 million.  The latter increase was largely attributable
   to a delay in finalizing the terms on a new contract and an
   internal disruption in a government finance office, both of which
   occurred in the fourth quarter of 1994.  The Company's cash flow
   was favorably impacted in 1994 and 1993 through the utilization
   of pay-in-kind interest on the Junior Subordinated Debentures and
   the sale of stock to the ESOP totaling $32.4 million and $29.2
   million, respectively.  The Company paid in cash the June 29,
   1995 interest payment on its 16% Junior Subordinated Debentures
   and on October 12, 1995, called the balance of the debentures outstanding.

        On June 30, 1995, the Company sold the stock of its
   subsidiaries engaged in the business of aircraft maintenance to
   Sabreliner Corporation for $13.7 million in cash subject to
   possible additional payments based on future business revenue of
   the sold subsidiaries.  On August 31, 1995, the Company sold to
   ALPHA Airports Group Plc, all of its subsidiaries engaged in
   ground handling for $122 million in cash, subject to final
   adjustments based on the closing balance sheet.  The net proceeds
   from these transactions were in excess of the book value of the
   net assets of the discontinued businesses and a gain of $1.4
   million, net of income taxes, was recognized in 1995.  The
   proceeds were used primarily to retire DynCorp debt and satisfy existing
   equipment financing obligations of the Ground Handling unit.
   These two sales represented the entire Commercial Aviation
   business.

        On July 25, 1995, the Company entered into a revolving
   credit facility with Citicorp North America, Inc. under which the
   Company may borrow up to $20 million secured by specified
   eligible government contract receivables ($15 million) and other
   receivables ($5 million).  The agreement requires the Company to
   maintain compliance with certain covenants and will expire on the
   earlier of July 23, 1996 or the refinancing of the existing $100
   million Contract Receivable Collateralized Notes.  In the event
   that the financing facility underlying the Contract Receivable
   Collateralized Notes is expanded, the Company is required to pay
   down the Citicorp North America, Inc. revolving credit facility.
   There were no borrowings under this line of credit at December
   31, 1995.  On March 14, 1996, the Company concluded an agreement
   with Citicorp for a $50 million Senior Secured Revolving Credit facility
   which amends and restates the aforementioned $20 million facility.

        The Company agreed to contribute up to $18.0 million in cash
   or stock to the ESOP to satisfy ESOP funding obligations for 1995
   and a portion of 1996.  The amount of the Company's annual
   contribution to the ESOP is determined by, and within the
   discretion of, the Board of Directors and may be in the form of
   cash, Common Stock or other qualifying securities.  In accordance
   with ERISA requirements and the ESOP plan documents, in the event
   that an employee participating in the ESOP is terminated,
   retires, dies or becomes disabled while employed by the Company,
   the ESOP Trust or the Company is obligated to repurchase shares
   of Common Stock distributed to such former employee under the
   ESOP, until such time as the Common Stock becomes "Readily
   Tradable Stock," as defined in the ESOP plan documents.  (See
   Note 7 to the Consolidated Financial Statements.)  Through
   December 31, 1996, the Company will be obligated to pay the
   higher of $27.00 per share or the fair market value at the time
   of repurchase for any such shares.  In the event the fair market
   value of a share is less than $27.00, the Company is committed to
   pay through December 31, 1996, up to an aggregate of $16.0
   million, the difference ("Premium") between the fair market value
   and $27.00 per share.  As of December 31, 1995, the Company had
   paid a total of $5.4 million of the premium to such former
   employees.  As of December 31, 1995, fair market value was
   determined to be $18.10 per share (for shares with a control
   premium) for shares allocated in the years 1988 through 1993, and
   $14.50 per share (for shares without a control premium) for
   shares allocated in 1994 and 1995. The Company estimates an aggregate
   annual commitment to repurchase shares from the ESOP participants
   as follows:  $3.9 million in 1996, $2.8 million in 1997, $5.5
   million in 1998, $6.0 million in 1999, $6.6 million in 2000 and
   $78.2 million thereafter.

        The Company is involved in various claims and lawsuits,
   including contract disputes and claims based on allegations of
   negligence and other tortious conduct.  The Company is also
   potentially liable for certain environmental, personal injury,
   tax and contract dispute issues related to the prior operations
   of divested businesses.  In most cases, the Company has denied,
   or believes it has a basis to deny liability, and in some cases
   has offsetting claims against the plaintiffs, third parties or
   insurance carriers.  The Company has recorded its best estimate
   of the liability that will result from these matters.  While it
   is not possible to predict with certainty the outcome of the
   litigation and other matters mentioned above, it is the opinion
   of the Company's management, based in part upon opinions of
   counsel, insurance in force and the facts presently known, that
   liabilities in excess of those recorded, if any, arising from
   such matters would not have a material adverse effect on the
   results of operations, consolidated financial position or
   liquidity of the Company over the long-term.  However, it is
   possible that the timing of the resolution of individual issues
   could result in a significant impact on the operating results
   and/or liquidity for an individual future reporting period.  (See
   Note 20 to the Consolidated Financial Statements.)

        At December 31, 1995, the Company had $105.4 million of debt
   remaining of which $100 million (Contract Receivable
   Collateralized Notes, Series 1992-1) becomes payable beginning in
   February, 1997.  Additionally, the Company's income tax liability
   for 1995, including the provision recorded as a result of the
   sale of the Commercial Aviation Business is payable in March, 1996
   and is estimated to be approximately $12.0 million.
   Assuming improved cash flow from the Company's continuing
   operations, the potential expansion of the financing facility
   underlying the Contract Receivable Collateralized Notes and the
   continuation of other programs which have been initiated to
   improve operations and cash flows, management believes the
   Company will be able to meet its debt obligations and working
   capital requirements. In addition, subject to covenants in the
   amended Revolving Credit facility, the Company expects to make cash
   contributions to the ESOP in 1996 to enable the ESOP to purchase
   shares directly from other shareholders.

        The Company's primary source of cash and cash equivalents is from
   operations.  The Company's principal customer is the U.S. Government.
   This provides for a dependable flow of cash from the collection of its
   accounts receivable.  Additionally, many of the contracts with the U.S.
   Government provide for progress billings based on costs incurred.
   These progress billings reduce the amount of cash that would
   otherwise be required during the performance of these contracts.

        Although the Company has made some progress toward
   diversification into non-defense business activities, the
   Company's largest single customer continues to be the Department
   of Defense (55% of revenue in 1995).  Due to the procurement
   cycles of its customers (generally three to five years), the
   Company's revenues and margins are subject to continual
   recompetition.  In a typical annual cycle approximately 20% to
   30% of the Company's business will be recompeted and the Company
   will bid on several new contracts.  Existing contracts can be
   lost or rewon at lower margins at any time and new contracts can
   be won.  The net outcome of this bidding process, which in any
   one year can have a dramatic impact on future revenues and
   earnings, is impossible to predict.  Also, if the U.S. Government
   budget is reduced or spending shifts away from locations or
   contracts for which the Company provides services, the Company's
   ability to retain current contracts or obtain new contracts could
   be significantly reduced.

   ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        Information with respect to this item is contained in the
   Company's Consolidated Financial Statements and Financial
   Statement Schedules included elsewhere in this Annual Report on
   Form 10-K.


                Report of Independent Public Accountants

   To DynCorp:

   We have audited the accompanying consolidated balance sheets of
   DynCorp (a Delaware corporation) and subsidiaries as of December
   31, 1995 and 1994, and the related consolidated statements of
   operations, stockholders' accounts and cash flows for each of the
   three years in the period ended December 31, 1995.  These
   consolidated financial statements and the schedules referred to
   below are the responsibility of the Company's management.  Our
   responsibility is to express an opinion on these consolidated
   financial statements and schedules based on our audits.

   We conducted our audits in accordance with generally accepted
   auditing standards.  Those standards require that we plan and
   perform an audit to obtain reasonable assurance about whether the
   financial statements are free of material misstatement.  An audit
   includes examining, on a test basis, evidence supporting the
   amounts and disclosures in the financial statements.  An audit
   also includes assessing the accounting principles used and
   significant estimates made by management, as well as evaluating
   the overall financial statement presentation.  We believe that
   our audits provide a reasonable basis for our opinion.

   In our opinion, the financial statements referred to above
   present fairly, in all material respects, the financial position
   of DynCorp and subsidiaries as of December 31, 1995 and 1994, and
   the results of their operations and their cash flows for each of
   the three years in the period ended December 31, 1995, in
   conformity with generally accepted accounting principles.

   Our audits were made for the purpose of forming an opinion on the
   basic financial statements taken as a whole.  The schedules
   listed in Item 14 of the Form 10-K are presented for purposes of
   complying with the Securities and Exchange Commission's rules and
   are not part of the basic financial statements.  These schedules
   have been subjected to the auditing procedures applied in the
   audits of the basic financial statements and, in our opinion,
   fairly state in all material respects the financial data required
   to be set forth therein in relation to the basic financial
   statements taken as a whole.

   Washington, D.C.,                        ARTHUR ANDERSEN LLP
   March 15, 1996



DynCorp and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)

                                                                 December 31,
                                                              1995      1994(a)
Current Assets:
   Cash and short-term investments (Notes 1 and 5)          $ 31,151   $  7,738
   Accounts receivable and contracts in process
     (Notes 3, 4 and 5)                                      179,706    172,731
   Inventories of purchased products and supplies,
     at lower of cost (first-in, first-out) or market          1,383        793
   Deferred income taxes (Note 14)                                 -      2,698
   Other current assets                                        8,095      4,122
   Net current assets of discontinued operations (Note 2)          -     18,316
      Total Current Assets                                   220,335    206,398

Property and Equipment, at cost (Notes 1 and 18):
   Land                                                        1,621      5,372
   Buildings and leasehold improvements                        9,773     24,348
   Machinery and equipment                                    30,234     25,868
                                                              41,628     55,588
   Accumulated depreciation and amortization                 (22,600)   (17,739)
      Net property and equipment                              19,028     37,849

Intangible Assets, net of accumulated amortization
   (Notes 1, 13 and 19)                                       50,689     51,837

Other Assets (Notes 5 and 20)                                 85,438     32,788

Net Noncurrent Assets of Discontinued Operations (Note 2)          -     67,128

      Total                                                 $375,490   $396,000

(a) Restated for the discontinuance of the Commercial Aviation business
    (see Note 2).

    See accompanying notes.


DynCorp and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
                                                                 December 31,
                                                                1995    1994(a)
Current Liabilities:
   Notes payable and current portion of long-term debt
    (Notes 3 and 5)                                         $  1,260   $  3,004
   Accounts payable (Note 3)                                  38,007     18,878
   Deferred revenue and customer advances (Note 1)             4,814      3,863
   Accrued income taxes (Notes 1, 3 and 14)                   11,374         30
   Accrued expenses (Note 6)                                 100,152     95,482
      Total Current Liabilities                              155,607    121,257

Long-term Debt (Notes 3 and 5)                               104,112    230,444

Deferred Income Taxes (Notes 1 and 14)                         2,917      1,210

Other Liabilities and Deferred Credits (Notes 3 and 20)       86,992     33,551
      Total Liabilities                                      349,628    386,462

Contingencies and Litigation (Note 20)                             -          -

Redeemable Common Stock, at fair value (Note 7)              129,843    121,170
Preferred Stock, Class C 18% cumulative, convertible,
  $24.25 liquidation value (liquidation value including
  unrecorded dividends $11,863,000 in 1995 and $9,948,000
  in 1994), 123,711 shares authorized, issued and
  outstanding (Note 8)                                         3,000      3,000
Common Stock, par value ten cents per share, authorized
  20,000,000 shares; issued 1,588,587 shares in 1995
  and 812,387 shares in 1994 (Note 9)                            159         81
Common Stock Warrants (Note 10)                               11,305     11,486
Unissued Common Stock under restricted stock plan (Note 10)    5,908      9,923
Paid-in Surplus                                               13,122       (106)
Deficit                                                     (115,888)  (118,256)
Common Stock Held in Treasury, at cost; 1,234,157 shares
  and 173,988 warrants in 1995 and 459,309 shares and
  173,988 warrants in 1994                                   (21,084)    (8,817)
Unearned ESOP Shares (Note 12)                                  (503)         -
Cummings Point Industries Note Receivable (Notes 3 and 11)         -     (8,943)
     Total                                                  $375,490   $396,000

(a) Restated for the discontinuance of the Commercial Aviation business
    (see Note 2).

    See accompanying notes.


DynCorp and Subsidiaries
Consolidated Statements of Operations
For the Years Ended December 31
(Dollars in thousands except per share data)



                                                       1995   1994(a)   1993(a)
Revenues (Note 1)                                  $908,725  $818,683  $777,216

Costs and expenses:
     Cost of services                              $871,471  $783,095  $742,455
     Selling and corporate administrative            18,705    16,887    17,547
     Interest expense                                14,856    14,903    14,777
     Interest income                                 (3,804)   (2,398)   (2,428)
     Other (Note 13)                                 10,058     7,654     7,109
        Total costs and expenses                    911,286   820,141   779,460

Loss from continuing operations before income taxes,
 minority interest and extraordinary item            (2,561)   (1,458)   (2,244)
   Provision (benefit) for income taxes (Note 14)    (9,090)   (2,236)    1,289
Earnings (loss) from continuing operations before
 minority interest and extraordinary item             6,529       778    (3,533)
   Minority interest (Note 1)                         1,255     1,130       952

Earnings (loss) from continuing operations before
 extraordinary item                                   5,274      (352)   (4,485)
   Loss from discontinued operations, net of
     income taxes (Note 2)                           (1,416)  (12,479)   (8,929)
   Gain on sale of discontinued operations, net of
     income taxes (Note 2)                            1,396         -         -

Earnings (loss) before extraordinary item             5,254   (12,831)  (13,414)
   Extraordinary loss from early extinguishment
     of debt, net of income taxes (Note 5)           (2,886)        -         -

Net earnings (loss)                                 $ 2,368  $(12,831) $(13,414)

  Preferred Class C dividends not declared or
    recorded (Note 8)                                (1,915)   (1,606)   (1,347)

Common stockholders' share of earnings (loss)       $   453  $(14,437) $(14,761)

Earnings (Loss) Per Common Share (Note 16)
  Primary and fully diluted:
    Continuing operations before extraordinary item $  0.27  $  (0.29) $  (1.13)
    Discontinued operations                               -     (1.83)    (1.74)
    Extraordinary item                                (0.23)        -         -
    Common stockholders' share of earnings (loss)   $  0.04  $  (2.12) $  (2.87)

(a) Restated for the discontinuance of the Commercial Aviation business
    (see Note 2).

    See accompanying notes.


<TABLE>

DynCorp and Subsidiaries
Consolidated Statements of Stockholders' Accounts
For the Years Ended December 31
(Dollars in thousands)

<CAPTION>
                                                                                                     Unissued
                                                                                                      Common
                                                                                                       Stock
                                                                                                       Under
                                                       Redeemable   Preferred    Common      Stock  Restricted   Paid-in
                                                        Stock(a)      Stock     Stock(a)   Warrants Stock Plan  Surplus(a)   Deficit

<S>                                                       <C>        <C>        <C>        <C>       <C>         <C>       <C>
Balance December 31, 1992                                 $85,450    $ 3,000    $   65     $15,119   $ 9,941     $11,384   $(92,011)
  Stock issued under Restricted Stock Plan (Note 10)        1,781                                     (1,781)
  Treasury stock purchased (Notes 7 and 9)                 (1,985)                  11                             1,974
  Stock issued under the Management
   Employees Stock Purchase Plan (Note 7)                      47                                                    (42)
  Accrued compensation (Note 10)                                                                       2,235
  Payments received on Employee Stock
   Ownership Plan (Note 12)
  Contribution of stock to Employee Stock Ownership Plan
   (Note 12)                                                  437                   (3)                             (434)
  Stock issued in conjunction with acquisition (Note 7)     2,200                  (12)                           (2,188)
  Accrued interest on note receivable (Note 11)
  Net loss                                                                                                                  (13,414)
  Adjustment of shares to fair value                        2,066                                                 (2,066)
Balance, December 31, 1993                                 89,996      3,000        61      15,119    10,395       8,628   (105,425)
  Stock issued under Restricted Stock Plan (Note 10)        1,718                                     (1,694)        (24)
  Treasury stock purchased (Notes 7 and 9)                 (2,645)                  20         (57)                2,349
  Stock issued under the Management Employees
    Stock Purchase Plan (Note 7)                               37                                                    (39)
  Warrants exercised (Note 10)                              3,944                           (3,576)
  Accrued compensation (Note 10)                                                                       1,222
  Contribution of stock to Employee Stock Ownership Plan
    (Note 12)                                              17,100
  Accrued interest on note receivable (Note 11)
  Net loss                                                                                                                  (12,831)
  Adjustment of shares to fair value                       11,020                                                (11,020)
Balance, December 31, 1994                                121,170      3,000        81      11,486     9,923        (106)  (118,256)
  Stock issued under Restricted Stock Plan (Note 10)        4,311                                     (4,015)       (296)
  Treasury stock purchased (Notes 7 and 9)                (12,240)                  78                            11,925
  Warrants exercised or canceled (Note 10)                    179                             (181)                   22
  Contribution of stock to Employee Stock Ownership Plan
    (Note 12)                                              18,000
  Payment received on Employee Stock Ownership Plan note
    (Note 12)
  Accrued interest on note receivable (Note 11)
  Collection of note receivable (Note 11)
  Net earnings                                                                                                                2,368
  Adjustment of shares to fair value                       (1,577)                                                 1,577
Balance, December 31, 1995                               $129,843    $ 3,000    $  159     $11,305   $ 5,908     $13,122  $(115,888)


(a) Restated to conform to the balance sheet presentation (see Note 1).

See accompanying notes.


</TABLE>

<TABLE>

DynCorp and Subsidiaries
Consolidated Statements of Stockholders' Accounts
For the Years Ended December 31
(Dollars in thousands)

<CAPTION>
                                                                     Employee
                                                                      Stock     Cummings
                                                                    Ownership     Point
                                                                    Plan Loan  Industries
                                                         Treasury  and Unearned  Note
                                                           Stock   ESOP Shares Receivable

<S>                                                      <C>        <C>        <C>
Balance December 31, 1992                                $ (6,538)  $(16,116)  $(6,410)
  Stock issued under Restricted Stock Plan (Note 10)
  Stock issued under the Management
  Treasury stock purchased (Notes 7 and 9)                 (1,980)
   Employees Stock Purchase Plan (Note 7)                      41
  Payments received on Employee Stock
   Ownership Plan (Note 12)                                           16,116
  Accrued compensation (Note 10)
  Contribution of stock to Employee Stock Ownership Plan
   (Note 12)                                                  437
  Stock issued in conjunction with acquisition (Note 7)     2,200
  Accrued interest on note receivable (Note 11)                                 (1,158)
  Net loss
  Adjustment of shares to fair value
Balance, December 31, 1993                                 (5,840)         -    (7,568)
  Stock issued under Restricted Stock Plan (Note 10)
  Treasury stock purchased (Notes 7 and 9)                 (2,690)
  Stock issued under the Management Employees
    Stock Purchase Plan (Note 7)                               32
  Warrants exercised (Note 10)                               (319)
  Accrued compensation (Note 10)
  Contribution of stock to Employee Stock Ownership Plan
    (Note 12)
  Accrued interest on note receivable (Note 11)                                 (1,375)
  Net loss
  Adjustment of shares to fair value
Balance, December 31, 1994                                 (8,817)         -    (8,943)
  Stock issued under Restricted Stock Plan (Note 10)
  Treasury stock purchased (Notes 7 and 9)                (12,267)
  Warrants exercised or canceled (Note 10)
  Contribution of stock to Employee Stock Ownership Plan
    (Note 12)                                                        (13,750)
  Payment received on Employee Stock Ownership Plan note
    (Note 12)                                                         13,247
  Accrued interest on note receivable (Note 11)                                   (951)
  Collection of note receivable (Note 11)                                        9,894
  Net earnings
  Adjustment of shares to fair value
Balance, December 31, 1995                               $(21,084)  $   (503)  $     -

See accompanying notes.

</TABLE>


DynCorp and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31
(Dollars in thousands)
                                                       1995    1994(a)   1993(a)
Cash Flows from Operating Activities:
 Net earnings (loss)                              $   2,368  $(12,831) $(13,414)
 Adjustments to reconcile net earnings (loss)
  to net cash provided by operating activities:
    Depreciation and amortization                    11,348    16,340    13,151
    Pay-in-kind interest on Junior Subordinated
     Debentures (Note 5)                                  -     8,787     6,676
    Loss, before tax, on purchase of Junior
     Subordinated Debentures (Note 5)                 4,786         -         -
    Loss from discontinued operations (Note 2)           20    12,479     8,929
    Deferred income taxes                             4,959    (2,258)      521
    Accrued compensation under Restricted Stock Plan      -     1,222     2,235
    Noncash interest income                               -    (1,375)   (1,158)
    Change in reserves of businesses divested in 1988 7,700     2,318     1,738
    Other                                            (1,124)      604      (129)
    Change in assets and liabilities, net of
     acquisitions and dispositions:
      Increase in accounts receivable and contracts
        in process                                   (6,975)  (22,502)   (2,030)
      (Increase) decrease in inventories               (340)     (466)       96
      (Increase) decrease in other current assets    (1,222)    5,648    (1,223)
      Decrease in current liabilities except notes
        payable and current portion of long-term debt(7,756)   (8,896)   (9,387)
 Cash provided (used) by continuing operations       13,764      (930)    6,005
 Cash (used) provided by operating activities of
  discontinued operations                            (3,375)   10,291     2,344
    Cash provided by operating activities            10,389     9,361     8,349

Cash Flows from Investing Activities:
 Sale of property and equipment                      16,294     1,944       927
 Proceeds received from notes receivable              8,950         6       446
 Purchase of property and equipment                  (4,789)   (3,742)   (3,576)
 Deferred income taxes from "safe harbor"
  leases (Note 14)                                     (554)     (499)     (441)
 Assets and liabilities of acquired businesses
  (excluding cash acquired) (Notes 1 and 19)         (1,092)  (14,312)  (10,890)
 Proceeds from sale of discontinued operations
  (Note 2)                                          135,700         -         -
 Cash on deposit for letters of credit (Note 5)      (3,307)      (21)   (2,916)
 Investing activities of discontinued operations    (11,439)   (4,781)   (1,424)
 Other                                                  176      (830)     (653)
    Cash provided (used) by investing activities    139,939   (22,235)  (18,527)

Cash Flows from Financing Activities:
 Treasury stock purchased (Note 7)                  (12,267)   (3,182)   (1,980)
 Payment on indebtedness                            (25,172)   (4,499)   (5,844)
 Redemption of Junior Subordinated Debentures
  (Note 5)                                         (105,971)        -         -
 Stock released to Employee Stock Ownership Plan
  (Note 12)                                          17,497    17,100    16,116
 Treasury stock sold                                      -       159        46
 Financing activities of discontinued operations       (228)     (697)     (521)
 Other                                                 (774)      (41)        -
    Cash (used) provided by financing activities   (126,915)    8,840     7,817
Net Increase (Decrease) in Cash and Short-term
    Investments                                      23,413    (4,034)   (2,361)
Cash and Short-term Investments at Beginning
    of the Year                                       7,738    11,772    14,133
Cash and Short-term Investments at End of the Year$  31,151  $  7,738  $ 11,772

(a) Restated for the discontinuance of the Commercial Aviation business
    (see Note 2).

    See accompanying notes.

DynCorp and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1995

(1) Summary of Significant Accounting Policies

Principles of Consolidation -- All majority-owned subsidiaries have
been included in the financial statements and all significant
intercompany accounts and transactions have been eliminated (see Note
2).  Outside investors' interest in the majority owned subsidiaries
is reflected as minority interest.  Investments less than 50% owned
are accounted for using the equity method of accounting.

Accounting Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles (GAAP)
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period.

Contract Accounting -- Contracts in process are stated at the lower
of actual cost incurred plus accrued profits or net estimated
realizable value of incurred costs, reduced by progress billings.
The Company records income from major fixed-price contracts,
extending over more than one accounting period, using the percentage-
of-completion method.  During performance of such contracts,
estimated final contract prices and costs are periodically reviewed
and revisions are made as required.  The effects of these revisions
are included in the periods in which the revisions are made.  On
cost-plus-fee contracts, revenue is recognized to the extent of costs
incurred plus a proportionate amount of fee earned, and on time-and-
material contracts, revenue is recognized to the extent of billable
rates times hours delivered plus material and other reimbursable
costs incurred.  Losses on contracts are recognized when they become
known.  Disputes arise in the normal course of the Company's business
on projects where the Company is contesting with customers for
collection of funds because of events such as delays, changes in
contract specifications and questions of cost allowability or
collectibility.  Such disputes, whether claims or unapproved change
orders in the process of negotiation, are recorded at the lesser of
their estimated net realizable value or actual costs incurred and
only when realization is probable and can be reliably estimated.
Claims against the Company are recognized where loss is considered
probable and reasonably determinable in amount.

    It is the Company's policy to provide reserves for the
collectibility of accounts receivable when it is determined that it
is probable that the Company will not collect all amounts due and the
amount of reserve requirement can be reasonably estimated.

    It is the Company's policy to defer labor and related costs
incurred in connection with the phase-in/start-up of new contracts (after the
award of the contract) when such costs are significant to the contract and
are not reimbursed separately by the customer.  These deferred costs are
generally amortized over the original contract period and option years
which are considered probable to be exercised.

Property and Equipment -- The Company computes depreciation and
amortization using both straight-line and accelerated methods.  The
estimated useful lives used in computing depreciation and
amortization on a straight-line basis are:  building, 15-33 years;
machinery and equipment, 3-20 years; and leasehold improvements, the
lesser of the useful life or the term of the lease.  Accelerated
depreciation is based on a 150% declining balance method with light-
duty vehicles assigned a three-year life and machinery and equipment
assigned a five-year life.  Depreciation and amortization expense was
$5,100,000 for 1995, $4,978,000 for 1994 and $4,468,000 for 1993.

    Cost of property and equipment sold or retired and the related
accumulated depreciation or amortization is removed from the accounts
in the year of disposal, and any gains or losses are reflected in the
consolidated statements of operations.  Expenditures for maintenance
and repairs are charged to expense as incurred, and major additions
and improvements are capitalized.

Intangible Assets -- Intangible assets principally consist of the
excess of the acquisition cost over the fair value of the net
tangible assets of businesses acquired.  In accordance with the
guidance provided in APB No. 16, the Company assesses and allocates,
to the extent possible, excess acquisition price to identifiable
intangible assets and any residual is considered goodwill.  A large
portion of the intangible assets is goodwill which resulted from the
1988 LBO and merger, accounted for as a purchase, and represents the
existing technical capabilities, customer relationships and ongoing
business reputation that had been developed over a significant period
of time.  The Company believes that these relationships and the value
of the Company's business reputation were and continue to be long-
term intangible assets with an almost infinite life.  Since the APB
No. 17 limitation is 40 years, this period is used for amortization
purposes for the majority of the goodwill.  The value assigned to
identifiable intangible assets at the time of the LBO and merger in
1988 was amortized over applicable estimated useful lives and was
fully amortized as of December 31, 1994.

    At December 31, 1995, intangible assets consist of $47,846,000
of unamortized goodwill and $2,843,000 of value assigned to
contracts.  Goodwill is being amortized on a straight-line basis over
periods up to forty years ($47,461,000 forty years, $158,000 thirty
years and $227,000 ten years).  Amortization expense was $2,081,000, $4,343,000
(see Note 13(a)) and $2,568,000 in 1995, 1994 and 1993, respectively.
Amounts allocated to contracts are being amortized over the lives of
the contracts for periods up to ten years.  Amortization of amounts
allocated to contracts was $624,000, $2,051,000 and $3,555,000 in
1995, 1994 and 1993, respectively.  Cumulative amortization of
$13,785,000 and $29,895,000 has been recorded through December 31,
1995, of goodwill and value assigned to contracts, respectively.

    The Company assesses potential impairment of intangible assets,
including goodwill, on a continuing basis.  The Company uses an
estimate of its future undiscounted cash flows to evaluate whether
the intangible assets, including goodwill, are recoverable.  The
amount of impairment, if any, is measured based on projected
discounted cash flows using a discount rate reflecting the Company's
average cost of funds.

Income Taxes -- As prescribed by Statement of Financial Accounting
Standards (SFAS) No. 109 "Accounting for Income Taxes" the Company
utilizes the asset and liability method of accounting for income
taxes.  Under this method, deferred income taxes are recognized for
the tax consequences of temporary differences by applying enacted
statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax bases of
existing assets and liabilities, less valuation allowances, if
required.

Environmental Liabilities -- The Company accrues environmental costs
when it is probable that a liability has been incurred and the amount
can be reasonably estimated.  Recorded liabilities have not been
discounted.

Contingent Liabilities -- The Company's accounting policy is to
accrue an estimated loss from a loss contingency when it is probable
that an asset has been impaired or a liability has been incurred at
the date of the financial statements and the amount of the loss can
be reasonably estimated.  The accrual for a loss contingency may
include such costs as legal costs, settlement and compensating
amounts, estimated punitive damages and penalties.

Treasury Stock -- The Company records the purchase of treasury stock
at the lower of acquired cost or fair value.  The amount in excess of
fair value, as in the case of shares acquired from ESOP participants,
is recorded as compensation expense (see Note 7).

Employee Stock Ownership Plan -- The Company has adopted Statement of
Position (SOP) 93-6, "Employers Accounting for Employee Stock
Ownership Plans," issued in November 1993 and effective for financial
statements issued after December 15, 1993.

Postretirement Health Care Benefits -- The Company provides no
significant postretirement health care or life insurance benefits to
its retired employees other than allowing them to continue as a
participant in the Company's plans with the retiree paying the full
cost of the premium.  The Company has determined, based on an
actuarial study, that it has no liability under SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions."

Postemployment Benefits -- The Company has no liability under SFAS
No. 112, "Employers' Accounting for Postemployment Benefits," as it
provides no benefits as defined.

Other -- The Financial Accounting Standards Board issued SFAS No.
114, "Accounting by Creditors for Impairment of a Loan," and SFAS No.
115, "Accounting for Certain Investments in Debt and Equity
Securities," in May 1993 and SFAS No. 119, "Disclosure About
Derivative Financial Instruments," in October 1994.   The Company
holds no significant financial instruments of the nature described in
these pronouncements and therefore believes the statements do not
have a material effect on its results of operations or financial
condition.

New Accounting Pronouncements -- SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" requires that long-lived assets and certain intangibles
be reviewed for impairment when events or circumstances indicate the
carrying amount of an asset may not be recoverable.  The Company's
practice is consistent with the guidelines as set forth in the
Statement. The Statement was issued in March, 1995 and is effective
for fiscal years beginning after December 15, 1995.

    SFAS No. 123, "Accounting for Stock-Based Compensation" was
issued in October, 1995 and is effective for fiscal years beginning
after December 15, 1995.  The Statement encourages, but does not
require, adoption of the fair value based method of accounting for
employee stock options and other stock compensation plans.  The
Company has opted to account for its stock option plan, which was
adopted in October 1995, in accordance with APB Opinion No. 25,
"Accounting for Stock Issued to Employees."  By doing so, the
Company, beginning in 1996, will be required to make proforma
disclosure of net income and earnings per share as if the fair value
based method for accounting defined in Statement 123 had been
applied.

Consolidated Statements of Cash Flows -- For purposes of these
statements, short-term investments which consist of certificates of
deposit and government repurchase agreements with a maturity of
ninety days or less are considered cash equivalents.  Cash and short-
term investments at December 31, 1995 exclude $9,244,000 of
restricted cash which is classified as Other Assets.

Classification -- Consistent with industry practice, assets and
liabilities relating to long-term contracts and programs are
classified as current although a portion of these amounts is not
expected to be realized within one year.

    Cash paid for income taxes was $3,140,000 for 1995, $1,145,000
for 1994 and $1,059,000 for 1993.

    Cash paid for interest, excluding the interest paid under the
Employee Stock Ownership Plan term loan, was $22,100,000 for 1995,
$10,984,000 for 1994 and $11,545,000 for 1993.  The increase in 1995
over prior years resulted from the payment in cash (as opposed to
payment-in-kind) of interest on the Company's 16% Junior Subordinated
Debentures (see below).

    Noncash investing and financing activities consist of the
following (in thousands):

                                            1995     1994     1993
Acquisitions of businesses:
   Assets acquired                       $ 2,772  $30,302  $31,675
   Liabilities assumed                    (1,680) (15,990) (17,198)
   Stock issued                                -        -   (2,200)
   Notes issued and other liabilities          -        -   (1,382)
   Cash acquired                               -        -       (5)
   Net cash                              $ 1,092  $14,312  $10,890
Pay-in-kind interest on Junior
 Subordinated Debentures (Note 5)        $     -  $15,329  $13,142
Unissued common stock under
 restricted stock plan (Note 10)         $     -  $ 1,222  $ 2,235
Capitalized equipment leases and notes
  secured by property and equipment      $     -  $   121  $     -

    Change in Presentation of Stockholders' Accounts -- The
presentation of the stockholders' accounts in the balance sheets has
been revised as a result of classifying the ESOP shareholders and
management investor shareholders separately from outside investors
because of the redemption feature of the common stock held by the
ESOP and management investor shareholders.  In previously issued
financial statements, the stockholders' accounts were aggregated.
(See Note 7).

(2)   Discontinued Operations

      On June 29, 1995, the Company's Board of Directors determined
that it would be in the Company's best interest to discontinue the
entire Commercial Aviation Business operations.  On June 30, 1995,
the Company sold all of its subsidiaries engaged in the business of
commercial aircraft maintenance and modification to Sabreliner
Corporation for $13,700,000 in cash, subject to additional payments
based on future business revenues of the sold companies.  On August
31, 1995, the Company sold all of its subsidiaries engaged in the
business of commercial aviation ground handling services, cargo
handling, and refueling to ALPHA Airports Group Plc for $122,000,000
in cash, subject to adjustment to the final closing date balance
sheet. The net proceeds received were in excess of the book value of
the net assets of the businesses and a gain of $1,396,000, net of
income taxes, has been recognized. Goodwill arising out of the 1988
LBO and merger had been allocated to the commercial aviation business
based on net assets at that time and projected earnings before interest,
taxes, depreciation and amortization. The net proceeds were used
primarily to retire DynCorp debt and satisfy existing equipment funding
obligations of the Ground Handling unit.  As a result of these
divestitures, these businesses have been classified as discontinued
operations for financial reporting purposes.  These two sales
resulted in the divestiture of the Company's entire Commercial
Aviation business.

    The Company retained certain contingent liabilities of the
Commercial Aviation Business.  These contingent liabilities include
the normal general warranties and representations and certain
specific issues regarding environmental, insurance and tax matters.
The Company has recorded $3,250,000 to cover these contingent
liabilities of which $750,000 relates to environmental issues (see
Note 20, paragraph d).

    The components of discontinued operations on the consolidated
condensed balance sheets and statements of operations are as follows
(in thousands):


                                                   December 31, 1994
    Accounts receivable and contracts in process        $ 35,788
    Inventories of purchased products and supplies         5,561
    Other current assets                                   1,365
    Accounts payable                                      (7,921)
    Other current liabilities                            (16,477)
      Net current assets of discontinued operations     $ 18,316

    Property and equipment (net)                        $ 22,513
    Goodwill                                              42,955
    Other assets                                           1,863
    Other liabilities                                       (203)
       Net noncurrent assets of discontinued operations $ 67,128

                                                 Years Ended December 31,
                                               1995(a)       1994       1993

    Revenues                                 $130,709    $203,389   $175,928
    Cost of services (b)                      123,698     195,109    171,132
    Interest expense and other (d)              7,236      14,237     13,685
    Asset impairment (c)                            -       9,492          -
    Pre-tax gain on discontinued operations   (29,998)          -          -
    Income tax provision (benefit)             29,793      (2,970)        40
    Loss from discontinued operations        $   (20)    $(12,479)  $ (8,929)

    (a)  The results of operations for 1995 are not comparable to
         prior years due to the interim divestitures of the
         maintenance and ground handling operations.

    (b)  During 1994, the Company revised its estimate of the useful
         lives of certain machinery and equipment to conform to its
         actual experience with fixed asset lives.  It was determined
         the useful lives of these assets ranged from three to ten
         years as compared to the two to seven year lives previously
         utilized.  The effect of this change was to reduce
         depreciation expense and net loss from discontinued
         operations for the year ended December 31, 1994, by
         approximately $2,115,000 or $0.31 per share.

    (c)  The Company continually evaluated its alternatives in
         respect to the unsatisfactory performance by the Aircraft
         Maintenance unit which posted an operating loss of
         $5,351,000 in 1994, its fourth consecutive year of operating
         losses.  In 1991 and 1992, the unit experienced operating
         losses of $1,137,000 and $428,000, respectively.  In 1994,
         after posting an operating loss of $6,629,000 in 1993, the
         Company began exploring possible alternatives for the
         disposition, curtailment or closing of the unit.  For the
         first six months of 1994, the unit was approximately at a
         breakeven level.  In the third quarter, the Company engaged
         an investment advisor to market the maintenance unit and
         entered into discussions with a potential business partner.
         At December 31, 1994, the status of the unit was unresolved
         pending the outcome of discussions with potential investors
         and a major customer.  These discussions could have resulted
         in one of a number of alternatives, including the
         consummation of a joint venture, the procurement of long-
         term contracts, sale of the entire unit or the failure to
         negotiate any transaction at all.  Management projections
         indicated that the maintenance unit should be profitable in
         1995 with the exception of one site.  The Company believed
         that if it was unable to consummate a satisfactory
         resolution through any of these alternatives, the most
         likely course of action would be to consolidate its
         operations by closing one of the maintenance facilities.  In
         management's opinion, no single alternative (i.e., entering
         into a joint venture, the curtailment of operations or shut
         down of one or more facilities, or the divestiture of the
         unit as a whole) was more or less likely to occur; however,
         the Company believed that it had suffered at least a partial
         impairment of its investment in this unit.  Accordingly, it
         recorded an estimate of the applicable goodwill ($5,242,000)
         and other assets ($4,250,000) that would be written down in
         the event the consolidation or shut-down of one of the
         facilities became necessary.  The amount of goodwill
         represents the unamortized balance as of December 31, 1994
         of the goodwill allocated to the maintenance unit in Florida
         at the time of the Company's 1988 LBO and merger.  The
         amount of write-down of other assets consists of estimated
         losses to dispose of the inventory, property and equipment
         and to otherwise reserve for shut-down/consolidation of
         facilities.  The Florida operation was the most likely
         location to be closed since it had been incurring losses for
         several years and a loss was projected for 1995.  On June
         30, 1995, the Company sold the entire Aircraft Maintenance
         unit to Sabreliner Corporation (see the first paragraph of
         this Note 2).

    (d)  The Company has charged interest expense to discontinued
         operations of $7,950,000, $10,715,000 and $10,761,000 in
         1995, 1994 and 1993, respectively.  The interest expense
         charged is the sum of the interest on the debt of the
         discontinued operations assumed by the buyers plus an
         allocation of other consolidated interest that was not directly
         attributable to the continuing operations of the Comapny. The
         amount allocated was based on the ratio of net assets of the
         discontinued operations to the sum of total net assets of
         the Company plus consolidated debt other than debt of the
         discontinued operations that were assumed by the buyer and
         debt that was not directly attributed to any other
         operations of the Company. Subsequent to the discontinuance,
         the allocated interest (and applicable debt) was substantially
         eliminated by using the proceeds of the sale to pay off
         DynCorp debt in amounts substantially equal to the amounts
         used to allocate interest to the discontinued business
         activities.

(3)   Fair Value of Financial Instruments

    The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it is
practicable to estimate the value:

    Accounts Receivable, Accounts Payable and Accrued Income Taxes -
The carrying amount approximates the fair value due to the short
maturity of these instruments.

    Long-term debt and other liabilities - The fair value of the
Company's long-term debt is based on the current rate as if the issue
date were December 31, 1995 and 1994 for its Collateralized Notes and
on the quoted market price for its Junior Subordinated Debentures.
For the remaining long-term debt (see Note 5) and other liabilities
the carrying amount approximates the fair value.

    Cummings Point Industries, Inc. Note Receivable - The carrying
value approximated the fair value (see Note 11).

The estimated fair values of the Company's financial instruments at
December 31, are as follows (in thousands):

                                             1995                    1994
                                     Carrying      Fair     Carrying      Fair
                                      Amount      Value      Amount       Value

    Cash and short-term investments  $ 31,151   $ 31,151    $  7,738    $ 7,738
    Accounts receivable               179,706    179,706     172,731    172,731
    Accounts payable                   38,007     38,007      18,878     18,878
    Accrued income taxes                9,177      9,177          30         30
    Long-term debt and other
      liabilities                     104,112    105,584     232,830    228,951
    Cummings Point Industries, Inc.
      note receivable                       -          -       8,943      8,943


(4)  Accounts Receivable and Contracts in Process

  The components of accounts receivable and contracts in process were
as follows at December 31 (in thousands):

                                                         1995       1994
  U.S. Government:
       Billed and billable                            $109,937   $111,950
       Recoverable costs and accrued profit on
        progress completed but not billed               26,130     28,546
       Retainage due upon completion of contracts        1,901      4,046
                                                       137,968    144,542
  Other Customers (primarily subcontracts from
   U.S. Government prime contractors and other state,
   local and quasi-government agencies):
       Billed and billable (less allowance for
        doubtful accounts of $9 in 1995 and 1994)       32,479     22,781
       Recoverable costs and accrued profit on
        progress completed but not billed                9,259      5,408
                                                        41,738     28,189
                                                      $179,706   $172,731

  Billed and billable include amounts earned and contractually
billable at year-end but which were not billed because customer
invoices had not yet been prepared at year-end.  Recoverable costs
and accrued profit not billed is composed primarily of amounts
recognized as revenues, but which are not contractually billable at
the balance sheet dates.  It is expected that all amounts at December
31, 1995 will be collected within one year except for approximately
$11,500,000.

(5)  Long-term Debt

  At December 31, 1995 and 1994, long-term debt consisted of (in thousands):

                                                                1995       1994
  Contract Receivable Collateralized Notes, Series 1992-1   $100,000   $100,000
  Junior Subordinated Debentures, net of
    unamortized discount of $4,793 in 1994                         -    102,658
  Mortgages payable                                            3,802     22,285
  Notes payable, due in installments through
    2002, 9.88% weighted average interest rate                 1,570      6,993
  Capitalized equipment leases (see Note 18)                       -      1,512
                                                             105,372    233,448
  Less current portion                                         1,260      3,004
                                                            $104,112   $230,444

Debt maturities as of December 31, 1995, were as follows (in thousands):


                1996                                  $  1,260
                1997                                   100,564
                1998                                       498
                1999                                       297
                2000                                       328
                Thereafter                               2,425
                                                      $105,372

  On January 23, 1992, the Company's wholly owned subsidiary, Dyn
Funding Corporation (DFC), completed a private placement of
$100,000,000 of 8.54% Contract Receivable Collateralized Notes,
Series 1992-1 (the "Notes").  The Notes are collateralized by the
right to receive proceeds from certain U.S. Government contracts and
certain eligible accounts receivable of commercial customers of the
Company and its subsidiaries.   Credit support for the Notes is
provided by overcollateralization in the form of additional
receivables.  The Company retains an interest in the excess balance
of receivables through its ownership of the common stock of DFC.
Additional credit and liquidity support is provided to the Notes
through a cash reserve fund.  Interest payments are made monthly with
monthly principal payments beginning February 28, 1997.  (The period
between January 23, 1992 and January 30, 1997 is referred to as the
Non-Amortization Period.)  The notes are projected to have an average
life of five years and two months and to be fully repaid by July 30,
1997.

  Upon receiving the proceeds from the sale of the Notes, DFC
purchased from the Company an initial pool of receivables for
$70,601,000, paid $1,524,000 for expenses and deposited $3,000,000
into a reserve fund account and $24,875,000 into a collection account
with Bankers Trust Company as Trustee pending additional purchases of
receivables from the Company.  Of the proceeds received from DFC, the
Company used $38,112,000 to pay the outstanding balances of the
Employee Stock Ownership Plan term loan and revolving loan facility
under the Restated Credit Agreement and $33,280,000 was used for the
redemption of all of the outstanding Class A Preferred Stock plus
accrued dividends (the redemption price per share was $25.00 plus
accrued dividends of $.66).  The Company charged $8,047,000 of
unamortized discount and deferred issuance costs associated with the
redemption of the Class A Preferred Stock to paid-in surplus.

  On an ongoing basis, cash receipts from the collection of the
receivables are used to make interest payments on the Notes, pay a
servicing fee to the Company, and purchase additional receivables
from the Company.  Beginning February 28, 1997, instead of purchasing
additional receivables, the cash receipts will be used to repay
principal on the Notes.  During the Non-Amortization Period, cash in
excess of the amount required to purchase additional receivables and
meet payments on the Notes is to be paid to the Company subject to
certain collateral coverage tests.  The receivables pledged as
security for the Notes are valued at a discount from their stated
value for purposes of determining adequate credit support.  DFC is
required to maintain receivables, at their discounted values, plus
cash on deposit at least equal to the outstanding balance of the
Notes.

  The Notes may be redeemed in whole, but not in part, at the option
of DFC at a price equal to the principal amount of the Notes plus
accrued interest plus a premium (as defined).

  Mandatory redemption (payment of the Notes in full plus a premium)
is required in the event that (i) the collateral value ratio test is
equal to or less than .95 as of three consecutive monthly
determination dates and the Company has not substituted receivables
or deposited cash into the collection account to bring the collateral
value ratio above .95; or (ii) three special redemptions are required
within any consecutive 12-month period; or (iii) the aggregate stated
value of all ineligible receivables which have been ineligible
receivables for more than 30 days exceeds 7% of the aggregate
collateral balance and the collateral value ratio is less than 1.00.

  Special redemption (payment of a portion of the Notes plus a
premium) is required in the event that the collateral value ratio
test is less than 1.00 as of two consecutive monthly determination
dates and the Company has not substituted receivables or deposited
cash into the collection account to bring the collateral value ratio
to 1.00.

  Also, DFC may not purchase additional eligible receivables if the
Company has an interest coverage ratio (as defined) of less than
1.10; or if the Company has more than $40 million of scheduled
principal debt (as defined) due within 24 months prior to the
amortization date or $20 million of scheduled principal debt due
within 12 months prior to the amortization date.

  At December 31, 1995, $113,597,000 of accounts receivable are
restricted as collateral for the Notes.  Additionally, $3,000,000 of
cash is restricted as collateral for the Notes and $6,244,000 of cash
is restricted as collateral for letters of credit required for
certain contracts, most with terms of three to five years.  The
Company negotiated an agreement which provides for a $7,500,000
revolving letter of credit facility.  For each letter of credit
issued, the Company must assign a cash collateral deposit in favor of
the bank for 100% of the face value of the letter of credit.  The
Company will pay a fee of 1.5% per annum computed on the face amount
of the letter of credit for the period the letter of credit is
scheduled to be outstanding.  This restricted cash has been included
in Other Assets on the balance sheet at December 31, 1995.  To
conform with the current period presentation, restricted cash of
$3,000,000 and $2,937,000 representing collateral for the Notes and
letters of credit, respectively, has been reclassified to Other
Assets at December 31, 1994.

  On July 25, 1995, the Company entered into a revolving credit
facility with Citicorp North America, Inc. under which the Company
may borrow up to $20,000,000  secured by specified eligible
government contract receivables ($15,000,000) and other receivables
($5,000,000).  The agreement requires the Company to maintain
compliance with certain covenants and will expire on the earlier of
July 23, 1996 or the refinancing of the existing Contract Receivable
Collateralized Notes.  The Company utilized this credit facility
sporadically throughout the latter part of 1995, with maximum
borrowings of $5,500,000 in late August.  There were no borrowings
under this line of credit at December 31, 1995.  In the event that
the financing facility underlying the Contract Receivable
Collateralized Notes is expanded, the Company is required to pay down
the Citicorp North America, Inc. revolving credit facility.

  During 1995, the Company repurchased or called all of the
outstanding 16% Junior Subordinated Debentures.  The Company has
recorded an extraordinary loss of $2,886,000, net of an income tax
benefit of $1,900,000 consisting primarily of the write-off of
unamortized discount or deferred financing costs and also various
transaction costs.  The Debentures were scheduled to mature on June
30, 2003, and bore interest at 16% per annum, payable semi-annually.
The Company could, at its option, prior to September 9, 1995, pay the
interest either in cash or issue additional Debentures.  During 1994
and 1993, $15,329,000 and $13,142,000, respectively, of additional
Debentures were issued in lieu of cash interest payments (includes
$6,542,000 and $6,466,000 in 1994 and 1993 respectively, allocated to
discontinued operations).

  The Company obtained title to its corporate office building on July
31, 1992 by assuming a mortgage of $19,456,000.  The mortgage
maturity date was May 27, 1993; however, as provided, the Company
extended the mortgage to March 27, 1995 with an increase in the
interest rate of 1/2% per annum plus an extension fee.  On February
7, 1995, the Company sold the building to RREEF America Reit Corp. C
and entered into a 12-year lease with RREEF as the landlord.  The
facility was sold for $13,780,000 and the proceeds were applied to
the mortgage.  A net gain of $3,430,000 was realized on the
transaction and is being amortized over the life of the lease.  Since
the Company's intent was to discharge its obligation under the
mortgage with noncurrent assets, the amount was included in long-term
debt at December 31, 1994.

  The Company acquired the Alexandria, VA headquarters of Technology
Applications, Inc. ("TAI") on November 12, 1993, in conjunction with
the acquisition of TAI.  A mortgage of $3,344,000 bearing interest at
8% per annum was assumed.  Payments are made monthly and the mortgage
matures in April 2003.  Additionally, a $1,150,000 promissory note
was issued.  The note bears interest at 7% per annum.  Payments under
the note shall be made quarterly through October 1998.

  Deferred debt issuance costs are being amortized using the
effective interest rate method over the terms of the related debt.
At December 31, 1995, unamortized deferred debt issuance costs were
$790,000 and amortization for 1995, 1994 and 1993 was $743,000,
$324,000 and $328,000, respectively.

(6)  Accrued Expenses

  At December 31, 1995 and 1994, accrued expenses consisted of the
following (in thousands):

                                                1995     1994
  Salaries and wages                         $42,063 $ 45,181
  Insurance                                   14,921    9,564
  Interest                                     4,541    4,716
  Payroll and miscellaneous taxes              9,402    8,881
  Accrued contingent liabilities and
    operating reserves (see Note 20)          24,015   19,875
  Other                                        5,210    7,265

                                            $100,152 $ 95,482

(7)  Redeemable Common Stock

  In conjunction with the acquisition of Technology Applications,
Inc. in November 1993, the Company issued put options on 125,714
shares of common stock.  The holder may, at any time commencing on
December 31, 1998 and ending on December 31, 2000, sell these shares
to the Company at a price per share equal to the greater of $17.50;
or, if the stock is publicly traded, the market value at a specified
date; or, if the Company's stock is not publicly traded, the fair
value at the time of exercise.  At December 31, 1995 and 1994,
125,714 shares of common stock were outstanding at a per share fair
value (as described in the following paragraph) of $18.10 at December
31, 1995 and $18.20 at December 31, 1994.

  In accordance with ERISA regulations and the Employee Stock
Ownership Plan (the Plan) documents, the ESOP Trust or the Company is
obligated to purchase vested common stock shares from ESOP
participants (see Note 12) at the fair value (as determined by an
independent appraiser) as long as the Company's common stock is not
publicly traded.  The shares initially bought by the ESOP in 1988
were bought at a "control price," reflecting the higher price that
buyers typically pay when they buy an entire company (as the ESOP and
other investors did in 1988).  A special provision in the ESOP's 1988
agreement permits participants to receive a "control price" when they
sell these shares back to the Company under the ESOP's "put option"
provisions.  This "control price," determined by the appraiser as of
December 31, 1995, was $18.10 per share.  The additional shares
received by the ESOP in 1993 and 1994 were at a "minority interest
price," reflecting the lower price that buyers typically pay when
they are buying only a small piece of a company (as the ESOP did in
these years).  Participants do not have the right to sell these
shares at the "control price."  The minority interest price
determined by the independent appraiser as of December 31, 1995 was
$14.50 per share.  Participants receive their vested shares upon
retirement, becoming disabled, or death, over a period of one to five
years and for other reasons of termination over a period of one to
ten years, all as set forth in the Plan documents.  In the event the
fair value of a share is less than $27.00, the Company is committed
to pay through December 31, 1996, up to an aggregate of $16,000,000,
the difference (Premium) between the fair value and $27.00 per share.
As of December 31, 1995, the Company has purchased 617,236 shares
from participants and has expended $5,949,000 of the $16,000,000
commitment.  Based on the fair values of $18.10 and $14.50 per share
at December 31, 1995, the Company estimates a total Premium of
$8,500,000 and an aggregate annual commitment to repurchase shares
from the ESOP participants upon death, disability, retirement and
termination as follows; $3,900,000 in 1996, $2,800,000 in 1997,
$5,500,000 in 1998, $6,000,000 in 1999, $6,600,000 in 2000 and
$78,232,000 thereafter.  The fair value is charged to treasury stock
at the time of repurchase.  The estimated Premium of $8,500,000 has
been recorded as Other Expense in the Consolidated Statements of
Operations in 1989 through 1994 (see Note 13).  At December 31, 1995
and 1994, $2,551,000 and $4,121,000, respectively, of the estimated
Premium is included in Accrued Expenses and $100,481,000 and
$86,338,000 (3,535,195 and 2,516,802 shares outstanding at December
31, 1995 at fair values of $18.10 and $14.50 per share, respectively,
and 3,691,003 and 1,312,459 shares outstanding at December 31, 1994
at fair values of $18.20 and $14.60, respectively) is included in
Redeemable Common Stock.

  Redeemable common stock held by management investors includes those
shares issued to management investors pursuant to the merger in 1988,
shares issued through the Restricted Stock Plan (see Note 10) and
shares issued through the Management Employees Stock Purchase Plan
(the Stock Purchase Plan).  The Stock Purchase Plan allowed employees
in management, supervisory or senior administrative positions to
purchase shares of the Company's common stock along with warrants at
current fair value.  The Board of Directors was responsible for
establishing the fair value for purposes of the Stockholders
Agreement and the Stock Purchase Plan.  The Stock Purchase Plan was
discontinued in 1994.  Treasury stock, which the Company acquired
from terminated employees who had previously purchased shares from
the Company, was issued to employees purchasing stock under the Stock
Purchase Plan.

  Under the DynCorp Stockholders Agreement which expired on March 11,
1994, the Company was committed, upon an employee's termination of
employment, to purchase common stock shares held by employees
pursuant to the merger, through the Stock Purchase Plan or through
the Restricted Stock Plan.  If the Company's common stock becomes
publicly traded, the commitment by the Company to purchase these
shares is terminated.  The share price at December 31, 1995 for the
Restricted Stock, Management Investor and Stock Purchase shares was
$14.50 per common share and $109.64 for each share for which warrants
have not been exercised (one share of common stock at $14.50 per
share plus 6.6767 warrants at $14.25 per warrant).  However, the
Company may not purchase more than $250,000 of Management Investor
Shares or Restricted Stock shares in any fiscal year without the
approval of the Class C Preferred stockholders.  A new stockholders
agreement, adopted March 11, 1994, contains similar repurchase
obligations and expires March 10, 1999.  On May 10, 1995, the Board
of Directors, with the consent of the Class C Preferred stockholder,
approved the establishment of an Internal Market as a replacement for
the resale procedures included in the Dyncorp Stockholders Agreement.
The Internal Market permits eligible stockholders to sell shares of
common stock on four predetermined days each year.  While the Company
is initiating the Internal Market in an effort to provide liquidity
to stockholders, there can be no assurance that there will be
sufficient liquidity to permit stockholders to resell their shares on
the Internal Market.  At December 31, 1995, 1,387,330, 256,196 and
21,287 shares were outstanding at fair values of $14.50, $18.10 and
$109.64 per share, respectively, and at December 31, 1994, 1,664,966,
255,539 and 32,471 shares were outstanding at fair values of $14.60,
$18.20 and $110.41 per share, respectively.

  Following are the changes in Redeemable Common Stock for the three
years ended December 31, 1995 (in thousands):

<TABLE>
<CAPTION>
                                                           Redeemable Common Stock
                                                                       Management
                                                      Other     ESOP   Investors    Total
<C>                                                  <C>     <C>       <C>       <C>
Balance, December 31, 1992                           $    -  $ 67,900  $ 17,550  $ 85,450
Stock issued in conjunction with acquisition          2,200                         2,200
Stock issued under Restricted Stock Plan (Note 10)                        1,781     1,781
Treasury stock purchased                                       (1,465)     (520)   (1,985)
Stock issued under Management Employee Stock
 Repurchase Plan                                                             47        47
Contribution of stock to ESOP (Note 12)                           437                 437
Adjustment of shares to fair value                              1,873       193     2,066
Balance, December 31, 1993                            2,200    68,745    19,051    89,996
Stock issued under Restricted Stock Plan (Note 10)                        1,718     1,718
Treasury stock purchased                                       (2,344)     (301)   (2,645)
Stock issued under Management Employee
 Stock Purchase Plan                                                         37        37
Warrants exercised (Note 10)                                              3,944     3,944
Contribution of stock to ESOP (Note 12)                        17,100              17,100
Adjustment of shares to fair value                       88     2,837     8,095    11,020
Balance, December 31, 1994                            2,288    86,338    32,544   121,170
Stock issued under Restricted Stock Plan (Note 10)                        4,311     4,311
Treasury stock purchased                                       (2,904)   (9,336)  (12,240)
Warrants exercised (Note 10)                                                179       179
Contribution of stock to ESOP (Note 12)                        18,000              18,000
Adjustment of shares to fair value                      (13)     (953)     (611)   (1,577)
Balance, December 31, 1995                           $2,275  $100,481  $ 27,087  $129,843


</TABLE>


(8)   Preferred Stock Class C

  Class C Preferred Stock is convertible, at the option of the
holder, into one share of common stock, adjusted for any stock
splits, stock dividends or redemption.  At conversion, the holder of
Class C Preferred Stock is also entitled to receive such warrants as
have been distributed to the holders of the common stock.  Dividends
accrue at an annual rate of 18%, compounded quarterly.  At December
31, 1995, cumulative dividends of $8,863,000 have not been recorded
or paid.  Dividends will be payable only in the event of a
liquidation of the Company or when cash dividends are declared with
respect to common stock and only in an aggregate amount equal to the
aggregate amount of dividends that such holder would have been
entitled to receive if such Class C Preferred Stock had been
converted into common stock.  The holder of Class C Preferred Stock
is entitled to one vote per share on any matter submitted to the
holders of common stock for stockholder approval.  In addition, so
long as any Class C Preferred Stock is outstanding, the Company is
prohibited from engaging in certain significant transactions without
the affirmative vote of the holder of the outstanding Class C
Preferred Stock.

(9)   Common Stock

  Common stock includes those shares issued to outside investors and
shares issued through the Restricted Stock Plan, Management Employees
Stock Purchase Plan, the ESOP and Management Investor Shares which
have been purchased by the Company and are being held as treasury
stock.

(10)  Common Stock Warrants and Restricted Stock

  The Company initially issued warrants on September 9, 1988 to the
Class C Preferred stockholder and to certain common stockholders to
purchase a maximum of 5,891,987 shares of common stock of the
Company.  The warrants issued to Class C Preferred stockholder and to
certain common stockholders were recorded at their fair value of
$2.43 per warrant and warrants issued to a lender were recorded at
$3.28 per warrant.  Each warrant is exercisable to obtain one share
of common stock.  The stockholder may exercise the warrant and pay in
cash the exercise price of $0.25 for one share of common stock or may
sell back to the Company a sufficient number of the exercised shares
to equal the value of the warrants to be exercised.  During 1995,
74,670 warrants were exercised or canceled and 4,322,449 warrants
were outstanding at December 31, 1995.  Rights under the warrants
lapse no later than September 9, 1998.

  The Company had a Restricted Stock Plan (the Plan) under which
management and key employees could be awarded shares of common stock
based on the Company's performance.  The Company initially reserved
1,023,037 shares of common stock for issuance under the Plan.  Under
the Plan, Restricted Stock Units (Units) were granted to participants
who were selected by the Compensation Committee of the Board of
Directors.  Each Unit entitled the participant upon achievement of
the performance goals (all as defined) to receive one share of the
Company's common stock.  Units could not be converted into shares of
common stock until the participant's interest in the Units had
vested.  Vesting occurred upon completion of the specified periods as
set forth in the Plan.  In 1994 and 1993, the Company accrued as
compensation expense $1,222,000 and $2,235,000, respectively, under
the Plan which was charged to cost of services and selling and
corporate administrative expenses.


(11)  Cummings Point Industries, Inc. Note Receivable

     The Company loaned $5,500,000 (the "Note") to Cummings Point
Industries, Inc. ("CPI"), of which Capricorn Investors, L.P.
("Capricorn") owns more than 10%.  By separate agreement and as
security to the Company, Capricorn agreed to purchase the Note from
the Company upon three months' notice, for the amount of outstanding
principal plus accrued interest.  As additional security, Capricorn's
purchase obligation was collateralized by certain common stock and
warrants issued by the Company and owned by Capricorn.  The Note,
which had previously been reflected as a reduction in stockholders'
accounts, was paid in full in August, 1995.

(12)  Employee Stock Ownership Plan

  In September 1988, the Company established an Employee Stock
Ownership Plan (the Plan).  The Company borrowed $100 million and
loaned the proceeds, on the same terms as the Company's borrowings,
to the Plan to purchase 4,123,711 shares of common stock of the
Company (the "ESOP loan").  The common stock purchased by the Plan
was held in a collateral account as security for the ESOP loan from
the Company.  The Company was obligated to make contributions to the
Plan in at least the same amount as required to pay the principal and
interest installments under the Plan's borrowings.  The Plan used the
Company contributions to repay the principal and interest on the ESOP
loan.  As the ESOP loan was liquidated, shares of the Company's
common stock were released from the collateral account and allocated
to participants of the Plan.  As of December 31, 1993, the loan was
fully repaid.

  In accordance with subsequent amendments to the Employee Stock
Ownership Plan, the Company contributed an additional 25,000 shares
of common stock in December 1993 and in 1994 contributed cash of
$17,435,000 which the ESOP used to acquire 1,312,459 shares and to
pay interest and administrative expenses.  In March, 1995, the
Company sold 1,208,059 additional shares of common stock to the ESOP
for a cash purchase price of approximately $18,000,000; the cash paid
was generated by a contribution from the Company of $4,250,000 and a
loan by the Company to the ESOP in the amount of $13,750,000 payable
in quarterly installments through 1996.  Payments through December
31, 1995, were $17,497,000.  To enable it to satisfy its loan
commitments, the Company is obligated to contribute cash to the ESOP.

  The Plan covers a majority of the employees of the Company.
Participants in the Plan become fully vested after four years of
service.   Of the 6,669,229 shares acquired by the ESOP, 6,635,466
have been either issued or allocated to participants as of December
31, 1995.  The remaining shares, representing the unpaid balance on
the note receivable from the ESOP, have been reflected as a reduction
in stockholders' equity.  The Company recognizes ESOP expense each
year based on the fair value of the shares committed to be released.
The Company's cash contributions were determined based on the ESOP's
debt service and other expenses.  Stock contributions are determined
in accordance with the amended agreement.  In 1995 and 1994, cash
contributions to the ESOP were $17,497,000 and $17,435,000,
respectively; 1993 cash and stock contributions were $16,608,000 and
$437,000 respectively.  These amounts were charged to cost of
services and selling and corporate administrative expenses (including
interest on the ESOP term loan of $491,000 in 1993).

(13)  Other Expenses
                                                       Years Ended December 31,
                                                            (In thousands)
                                                         1995    1994     1993
Amortization of costs in excess
  of net assets acquired (f)(see Note 1)              $ 2,143  $ 2,347  $ 3,408
ESOP Repurchase Premium (see Note 7)                        -    1,323    1,507
Write-off of investment in
  unconsolidated subsidiary (a)                             -    3,250        -
Legal and other expense accruals
  associated with an acquired business (b)                  -   (1,830)   2,070
Costs associated with businesses discontinued in 1988
  and prior years
   * Asbestos liability issues (c)                      5,300        -
   * Subcontractor suit (d)                             2,400    2,665      500
   * Enviornmental costs (see Note 20(d))                   -     (347)     366
   * Other (e)                                              -        -     (573)
Miscellaneous                                             215       246    (169)
     Total Other                                      $10,058   $ 7,654 $ 7,109



  (a) The Company initally invested in this subsidiary in 1992.
      In June 1994, the Company paid an additional $1,250,000 to
      increase its holdings in the subsidiary from 40%
      to 50.1% and the subsidiary concurrently borrowed $6.0 million
      from another investor.  The total acquisition cost exceeded
      the underlying equity in net assets by $2,582,000.  The
      subsidiary's stockholders' agreement defined certain trigger
      events which, upon their occurrence, transferred control of
      the subsidiary from DynCorp to the other shareholders.  These
      trigger events occurred in the fourth quarter of 1994 and the
      subsidiary's lenders called the loans in 1995.  These actions,
      coupled with financial and cash flow projections provided by
      the subsidiary's management, have caused the Company to
      determine that its investment has been permanently impaired.
      As such, $3,250,000 representing the investment and excess
      purchase price was charged to Other Expenses in 1994. The
      investment was disposed of in 1995.

  (b) In 1993, $470,000 of expenses were incurred and an accrual was
      established for estimated future legal costs and possible
      fines and penalties associated with a federal investigation of
      an allegation that false statements were made in connection
      with a pricing proposal submitted by an acquired business
      prior to its acquisition in 1991.  The investigation was
      concluded in 1994 with the government finding no basis for
      prosecution.  As a consequence, the Company not only recovered
      a portion of its prior expenses, but also avoided any fines
      and penalties; consequently, the unused portion of the accrual
      was reversed in 1994.

  (c) Reserves for potential uninsured costs to defend and settle
      future asbestos claims against a former subsidiary (see
      Note 20(a)).

  (d) Reserves for the estimated costs (primarily legal defense) to
      resolve a lawsuit filed by a subcontractor of a former subsidiary
      (see Note 20(b)).

  (e) The credit in 1993 is a combination of reductions of reserves
      established in 1987 and 1988 for assumed liabilities and
      losses on disposition of assets that the Company retained from
      the discontinued and/or divested businesses in 1987 and 1989.

  (f) The Company acquired certain assets of Science Management
      Corporation ("SMC") for $1,851,000 on February 18, 1993 and
      allocated $1,162,000 of the purchase price to goodwill and
      $633,000 to contracts.  In the fourth quarter of 1993, the
      Company became aware of apparent misrepresentations by the
      sellers.  The Company reconsidered the estimated future
      undiscounted net income of SMC based on the revised facts and
      determined that an impairment write-down was necessary.  Based
      upon this reassessment, $988,000 of the original goodwill was
      written off and included in amortization of costs in excess of
      net assets acquired. The remaining amount of goodwill is being
      amortized over thirty years.

(14)  Income Taxes

  Earnings (loss) from continuing operations before income taxes and
minority interest (but including extraordinary item - see Note 5)
were derived from the following (in thousands):

                                    1995        1994         1993
  Domestic operations           $ (3,111)   $   (642)    $ (2,317)
  Foreign operations              (4,236)       (816)          73
                                $ (7,347)   $ (1,458)    $ (2,244)

  The provision (benefit) for income taxes consisted of the following
(in thousands):

                                               1995      1994      1993
  Current:
    Federal                                $(10,322)  $   (91)  $   683
    Foreign                                  (2,234)       54       170
    State                                    (1,493)       59       (85)
                                            (14,049)       22       768

  Deferred:
    Federal                                   2,042    (2,199)      500
    Foreign                                   1,000         -         -
    State                                     1,917       (59)       21
                                              4,959    (2,258)      521

    Total                                  $ (9,090)  $(2,236)  $ 1,289

 The components of and changes in deferred taxes are as follows (in thousands):

<TABLE>
<CAPTION>

                                                      Deferred               Deferred               Deferred
                                            Dec. 31,   Expense    Dec. 31,    Expense    Dec. 31,    Expense
                                               1995   (Benefit)      1994    (Benefit)      1993    (Benefit)
<S>                                        <C>         <C>        <C>        <C>         <C>         <C>
Deferred tax liabilities:
  Difference between book and tax
    method of accounting for
    depreciation and amortization          $   (347)   $   806    $   459    $   (632)  $   (173)    $   204
  Difference between book and tax
    method of accounting for certain
     employee benefits                       (1,160)     1,535        375         223        598      (1,194)
  Difference between book and tax method
    of accounting for income on U.S.
    Government contracts                     (9,786)       885     (8,901)         38     (8,863)      1,216
  Amortization of intangibles                  (798)      (275)    (1,073)        925       (148)       (204)
  Other, net                                    (27)       (26)       (53)         37        (16)        178
    Total deferred tax liabilities          (12,118)     2,925     (9,193)        591     (8,602)        200

Deferred tax assets:
  Deferred compensation expense               2,431      1,621      4,052       1,346      5,398        (380)
  Operating reserves and other accruals      18,985      1,290     20,275      (5,358)    14,917      (2,604)
  Increase due to federal rate change           335          -        335           -        335        (335)
  Deferred taxes of discontinued operations,
    retained by the Company                       -      4,018      4,018      (1,517)     2,501         901
  Benefit of state tax on temporary
    differences and state net operating
    loss carryforwards                        4,591        983      5,574        (716)     4,858      (1,135)
  Benefit of foreign, targeted jobs, R&E
    and AMT tax credit carryforwards              -      2,812      2,812        (282)     2,530      (1,073)
    Total deferred tax assets                26,342     10,724     37,066      (6,527)    30,539      (4,626)

Federal valuation allowance                  (6,555)    (7,707)   (14,262)      2,962    (11,300)      3,812
State valuation allowance                    (4,591)      (983)    (5,574)        716     (4,858)      1,135
Total temporary differences affecting
    tax provision                             3,078      4,959      8,037      (2,258)     5,779         521
Deferred taxes from "safe harbor"
    lease transactions                       (5,995)      (554)    (6,549)       (499)    (7,048)       (441)
    Net deferred tax asset (liability)     $ (2,917)   $ 4,405    $ 1,488    $ (2,757)  $ (1,269)    $    80


</TABLE>


  The tax provision (benefit) differs from the amounts obtained by applying the
statutory U.S. Federal income tax rate to the pre-tax loss from continuing
operations amounts. The differences can be reconciled as follows (in thousands):

                                                     1995      1994      1993
    Expected Federal income tax benefit           $  (896)  $  (510)  $  (763)
    Valuation allowance                            (7,707)    2,962     3,812
    State and local income taxes, net of
      Federal income tax benefit                      275         -       (42)
    Tax benefit of discontinued operations              -      (191)   (2,721)
    Reversal of tax reserves for IRS examination        -    (4,069)        -
    Nondeductible amortization of intangibles
      and other costs                                (263)      635     1,069
    Foreign income tax                                  -        54        96
    Foreign, targeted job, R&E, AMT and
      fuel tax credits                               (257)     (537)     (189)
    Other, net                                       (242)     (580)       27
         Tax provision (benefit)                  $(9,090)  $(2,236)  $ 1,289

      The Company's U.S. Federal income tax returns have been
  audited through 1993.  The Internal Revenue Service has completed
  two examinations of the Company's tax returns; for the period
  1985-1988 and for the period 1989-1993.  The IRS proposed several
  adjustments to both periods, the most significant of which
  related to deductions taken by the Company for expenses incurred
  in the 1988 merger.  The Company and the IRS settled these
  proposed adjustments for the 1985-1988 audit in 1994; however,
  the Joint Congressional Committee on Taxation did not issue its
  approval of the proposed settlement until December 7, 1995.  The
  Company and the IRS agreed upon the proposed adjustments of the
  1989-1993 audit in 1995, and such proposal is currently under
  review by the Joint Congressional Committee on Taxation.    Tax
  of $1.4 million was paid in 1995 for the 1985-1988 audit.
  Remaining taxes and accrued interest associated with these two
  audits, which have not yet been assessed, are approximately $2.3
  million.

      The benefit for income taxes in 1995 reflects a tax
  provision based on an estimated annual effective tax rate,
  excluding expenses not deductible for tax and the reversal of
  $7.7 million of tax valuation reserves for deferred taxes which
  will be realized in the 1995 tax return.  The 1994 federal tax benefit
  resulted from the reversal of tax reserves for the IRS examination and
  the tax benefit for operating losses, net of a valuation allowance,
  less the federal tax provision of a majority owned subsidiary
  required to file a separate return. The Federal tax
  provision recognized in 1993 was only that of the majority owned
  subsidiary referred to previously.

       The Company has state net operating loss carryforwards
  available to offset future taxable income.  Following are the net
  operating losses by year of expiration (in thousands):

               Year of          State Net
              Expiration      Operating Losses

                 2000            $ 1,286
                 2002                278
                 2005                112
                 2010             39,443
                                 $41,119

(15)  Pension Plans

  Union employees who are not participants in the ESOP are covered
by multiemployer pension plans under which the Company pays fixed
amounts, generally per hours worked, according to the provisions of
the various labor contracts.  In 1995, 1994 and 1993, the Company
expensed $2,514,000, $2,367,000 and $2,321,000, respectively, for
these plans.  Under the Employee Retirement Income Security Act of
1974 as amended by the Multiemployer Pension Plan Amendments Act of
1980, an employer is liable upon withdrawal from or termination of a
multiemployer plan for its proportionate share of the plan's
unfunded vested benefits liability.  Based on information provided
by the administrators of the majority of these multiemployer plans,
the Company does not believe there is any significant amount of
unfunded vested liability under these plans.

(16)  Earnings (Loss) Per Common Share

  Primary earnings or loss per share is based on the weighted
average number of common and dilutive common equivalent shares
outstanding during the period.  In addition, shares earned and
vested but unissued under the Restricted Stock Plan are included as
outstanding common stock.  For years 1994 and 1993, warrants
outstanding have been excluded from the calculation of loss per
share as their effect is antidilutive because of the losses incurred
during the periods (see also Note 10).  For years 1995, 1994 and
1993, shares which would be issued under the assumed conversion of
Class C Preferred stock have been excluded from the calculation of
earnings per share as their effect is antidilutive.  The earnings or
loss per common share for 1995, 1994 and 1993 includes the effect of
the unpaid dividends on the Class C Preferred Stock ($1,915,000 in
1995, $1,606,000 in 1994 and $1,347,000 in 1993).  The average
number of shares used in determining primary earnings or loss per
share was 12,556,347 in 1995, 6,802,012 in 1994 and 5,141,319 for
1993.

(17)  Incentive Compensation Plans

  The Company has several formal incentive compensation plans which
provide for incentive payments to officers and key employees.
Incentive payments under these plans are based upon operational
performance, individual performance, or a combination thereof, as
defined in the plans.  Incentive compensation expense was $6,692,000
for 1995, $7,067,000 for 1994 and $6,180,000 for 1993.

(18)  Leases

  Future minimum lease payments required under operating leases that
have remaining noncancellable lease terms in excess of one year at
December 31, 1995 are summarized below (in thousands):

           Years Ending December 31,
                   1996                        $ 9,762
                   1997                          8,229
                   1998                          7,147
                   1999                          6,040
                   2000                          1,778
                   Thereafter                    8,471
               Total minimum lease payments    $41,427

  Net rent expense for leases was $24,734,000 for 1995, $14,286,000
for 1994 and $10,425,000 for 1993.

(19)  Acquisitions

  On October 31, 1994, the Company acquired all of the issued and
outstanding shares of stock of CBIS Federal Inc. for a cash payment
of $8,159,000 subject to adjustment based on the closing balance
sheet.  In June, 1995, the Company made a final payment to the
seller and in the fourth quarter, the allocation of the purchase
price was finalized.  The acquisition was accounted for as a
purchase and $8,141,000 of goodwill and $2,500,000 of value assigned
to contracts was recorded which will be amortized over 40 years and
10 years, respectively.

(20) Contingencies and Litigation

     The Company and its subsidiaries and affiliates are involved
in various claims and lawsuits, including contract disputes and
claims based on allegations of negligence and other tortious
conduct.  The Company is also potentially liable for certain
personal injury, tax, environmental and contract dispute issues
related to the prior operations of divested businesses.  In most
cases, the Company and its subsidiaries have denied, or believe
they have a basis to deny, liability, and in some cases have
offsetting claims against the plaintiffs, third parties or
insurance carriers.  The amount of possible damages currently
claimed by the various plaintiffs for these items, a portion of
which is expected to be covered by insurance, aggregate
approximately $120,000,000 (including compensatory and possible
punitive damages and penalties).  This amount includes estimates
for claims which have been filed without specified dollar amounts
or for amounts which are in excess of recoveries customarily
associated with the stated causes of action; it does not include
any estimate for claims which may have been incurred but which
have not yet been filed.  The Company has recorded such damages
and penalties that are considered to be probable recoveries
against the Company or its subsidiaries. These issues are
described below.

(a)  A former acquired subsidiary, Fuller-Austin Insulation
     Company (the subsidiary), which discontinued its business
     activities in 1986, has been named as one of many defendants
     in civil lawsuits which have been filed in various state
     courts beginning in 1986 (principally Texas) against
     manufacturers, distributors and installers of asbestos
     products.  The  subsidiary was a nonmanufacturer that
     installed or distributed industrial insulation products.
     The subsidiary had discontinued the use of asbestos products
     prior to being acquired by the Company in 1974.  These
     claims are not part of a class action.

          The claimants generally allege injuries to their health
          caused by inhalation of asbestos fibers.  Many of the
          claimants seek punitive damages as well as compensatory
          damages.  The amount of damages sought is impacted by a
          multitude of factors.  These include the type and
          severity of the disease sustained by the claimant (i.e.
          mesothelioma, lung cancer, other types of cancer,
          asbestosis or pleural changes); the occupation of the
          claimant; the duration of the claimant's exposure to
          asbestos-containing products; the number and financial
          resources of the defendants; the jurisdiction in which
          the claim is filed; the presence or absence of other
          possible causes of the claimant's illness; the
          availability of legal defenses such as the statute of
          limitations; and whether the claim was made on an
          individual basis or as part of a group claim.

          Claim Exposure:

          As of March 1, 1996, 8,630 plaintiffs have filed claims
          against the subsidiary and various other defendants.
          Of these claims 1,187 have been dismissed, 1,898 have
          been resolved without an admission of liability at an
          average cost of $5,000 per claim (excluding legal
          defense costs) and an additional 2,606 claims have been
          settled in principle (subject to future processing and
          funding) at an average cost of $1,950 per claim.
          Following is a summary of claims filed against the
          subsidiary through March 1, 1996:

                                               Years
                            Prior    1993   1994    1995   1996(1)  Total
    Claims filed            2,160     668  1,026   4,647    129     8,630
    Claims dismissed          (14)    (65)   (21) (1,035)   (52)   (1,187)
    Claims resolved           (76) (1,142)  (333)   (182)  (165)   (1,898)
    Settlements in process                                         (2,606)
    Claims outstanding at March 1, 1996                             2,939

    (1)  January 1 - March 1, 1996

        In connection with these claims the subsidiary's primary
     insurance carriers have incurred approximately $16,300,000
     (including $6,800,000 of legal defense costs but excluding
     $5,100,000 for settlements in process) to defend and settle
     the claims and, in addition, judgments have been entered
     against the subsidiary for jury verdicts of $6,500,000 which
     have not been paid and which are under appeal by the
     subsidiary.  Through December 31, 1995, the Company and the
     subsidiary have charged to expense approximately $12,500,000
     consisting of $6,200,000 of charges under retrospectively
     rated insurance policies and $6,300,000 of reserves for
     potential uninsured legal and settlement costs related to
     these claims.  These charges substantially eliminate any
     further exposure for retrospectively determined premium
     payments under the retrospectively rated insurance policies.

     During 1995, the subsidiary continued its strategy to
     require direct proof that claimants had significant exposure
     to asbestos as the result of the subsidiary's operations.
     This has resulted in an increased level of trial activity.
     The subsidiary believes that this strategy will have the
     near term effect of increasing average per-case resolution
     cost but will reduce the overall cost of asbestos personal
     injury claims in the long run by limiting indemnity payments
     only to claimants who can establish significant asbestos-
     related impairment and exposure to the subsidiary's
     operations and by substantially reducing indemnity payments
     to individuals who are unimpaired or who did not have
     significant exposure to asbestos as a result of the
     subsidiary's operations.  Further, the level of filed claims
     has become significant only since 1992, and therefore, the
     subsidiary has a relatively brief history (compared to
     manufacturers and suppliers) of claims volume and a limited
     data file upon which to estimate the number or costs of
     claims that may be received in the future.  Also, effective
     September 1, 1995, the State of Texas enacted tort reform
     legislation which is believed to have caused a nonrecurring
     surge in the volume of filed claims in 1995 immediately
     prior to the effective date of the legislation.

     The Company and its defense counsel have analyzed the 8,630
     claim filings incurred through March 1, 1996.  Based on this
     analysis and consultation with its professional advisors,
     the subsidiary has estimated its cost, including legal
     defense costs, to be $20,000,000 for claims filed and still
     unsettled and $40,000,000 as its minimum estimate of future
     costs of unasserted claims, including legal defense costs.
     No upper limit of exposure can presently be reasonably
     estimated.  The Company cautions that these estimates are
     subject to significant uncertainties including the future
     effect of the State of Texas enacted tort reform
     legislation, the size of jury verdicts, success of appeals
     in process, the number and financial resources of future
     plaintiffs, and the actions of other defendants.  Therefore,
     actual experience may vary significantly from such estimates.  At
     December 31, 1995 and 1994 (restated), the subsidiary
     recorded an estimated liability for future indemnity
     payments and defense costs related to currently unsettled
     claims and minimum estimated future claims of $60,000,000
     and $17,000,000, respectively (recorded as long-term
     liability).

     Insurance coverage:

     Defense has been tendered to and accepted by the
     subsidiary's primary insurance carriers, and by certain of
     the Company's primary insurance carriers that issued
     policies under which the subsidiary is named as an
     additional insured; however, only one such primary carrier
     has partially accepted defense without a reservation of
     rights.  The Company believes that the subsidiary has at
     least $12,000,000 in unexhausted primary coverage (net of
     deductibles and self-insured retentions but including
     disputed coverage) under its liability insurance policies to
     cover the unsettled claims, verdicts and future unasserted
     claims and defense costs.  When the primary limits are
     exhausted, liability for both indemnity and legal defense
     will be tendered to the excess coverage carriers, all of
     which have been notified of the pendency of the asbestos
     claims.  The Company and the subsidiary have approximately
     $490,000,000 of additional excess and umbrella insurance
     that is generally responsive to asbestos claims.  This
     amount excludes approximately $92,000,000 of coverage issued
     by insolvent carriers of which $35,000,000 is the next
     insurance layer above the Company's primary coverage carrier
     for policy years 1979 through 1984.  All of the Company's
     and the subsidiary's liability insurance policies cover
     indemnity payments and defense fees and expenses subject to
     applicable policy terms and conditions.

     Coverage litigation:

     The Company and the subsidiary have instituted litigation in
     Los Angeles Superior Court, California, against their
     primary and excess insurance carriers, to obtain declaratory
     judgments from the Court regarding the obligations of the
     various carriers to defend and pay asbestos claims.  The
     issues in this litigation include the aggregate liability of
     the carriers, the triggering and drop-down of excess
     coverage and allocation of losses covering multiple carriers
     and insolvent carriers, and various other issues relating to
     the interpretation of the policy contracts.  The Company and
     the subsidiary have analyzed their insurance policies and
     the history of coverage and insurance reimbursement for
     these types of claims, and have consulted with knowledgeable
     third party experts with significant experience in insurance
     coverage matters.  Based on these analyses, discussions, and
     consultations with legal counsel, management believes that
     it is probable that the Company and the subsidiary will
     prevail in obtaining judicial rulings confirming the
     availability of a substantial portion of the coverage,
     assuming no additional carrier insolvencies.  The subsidiary
     recorded in Other Assets $60,000,000 and $17,000,000 (not
     including reserves of $7,000,000 and $2,000,000,
     respectively) at December 31, 1995 and 1994 (restated),
     respectively, representing the amounts that it expects to
     recover from its insurance carriers for the payment of
     currently unsettled and estimated future claims.  The
     Company cautions, however, that pending the outcome of the
     coverage litigation, such insurance coverage is unconfirmed
     and the actual amounts available to or recoverable by the
     Company and the subsidiary could, depending upon the outcome
     of the litigation and/or negotiation, be lower.

     While the Company and the subsidiary believe that they have
     recorded sufficient liability to satisfy the subsidiary's
     reasonably anticipated costs of present and future
     plaintiffs' suits, it is not possible to predict the amount
     or timing of future suits or the future solvency of its
     insurers.  In the event that currently unsettled and future
     claims exceed the recorded liability of $60,000,000, the
     Company believes that the judicially determined and/or
     negotiated amounts of excess and umbrella insurance coverage
     that will be available to cover additional claims will be
     significant; however, it is unable to predict whether or not
     such amounts will be adequate to cover all additional claims
     without further contribution by its subsidiary.

(b)  The Company has retained certain liability in connection
     with its 1989 divestiture of its major electrical
     contracting business, Dynalectric Company ("Dynalectric").
     The Company and Dynalectric were sued in 1988 in Bergen
     County Superior Court, New Jersey, by a former Dynalectric
     joint venture partner/subcontractor (subcontractor).  The
     subcontractor has alleged that its subcontract to furnish
     certain software and services in connection with a major
     municipal traffic signalization project was improperly
     terminated by Dynalectric and that Dynalectric fraudulently
     diverted funds due, misappropriated its trade secrets and
     proprietary information, fraudulently induced it to enter
     the joint venture, and conspired with other defendants to
     commit acts in violation of the New Jersey Racketeering
     Influenced and Corrupt Organization Act.  The aggregate
     dollar amount of these claims has not been formally recited
     in the subcontractor's complaint.  Dynalectric has also
     filed certain counterclaims against the former
     subcontractor.  The Company and Dynalectric believe that
     they have valid defenses, and/or that any liability would be
     offset by recoveries under the counterclaims.  Discovery is
     ongoing; no trial date has been scheduled.  The Company
     believes that it has established adequate reserves
     ($4,023,000 at December 31, 1995) for the contemplated
     defense costs and for the cost of obtaining enforcement of
     arbitration provisions contained in the contract.

(c)  In November, 1994, the Company acquired an information
     technology business which was involved in various disputes
     with federal and state agencies, including two contract
     default actions and a qui tam suit by a former employee
     alleging improper billing of a federal government agency
     customer.  The Company has contractual rights to
     indemnification from the former owner of the acquired
     subsidiary with respect to the defense of all such claims
     and litigation, as well as all liability for damages when
     and if proven.  In October, 1995, one of the federal
     agencies asserted a claim against the subsidiary and gave
     the Company notice that it intended to offset against the
     contract under which the claim arose.  To date, the agency
     has withheld  approximately $3,300,000 allegedly due the
     agency under one of the aforementioned disputes.  The
     Company has submitted a demand for indemnification to the
     former owner of the subsidiary which has been denied.  The
     Company has commenced arbitration of the indemnification
     denial under the terms of the acquisition agreement which
     the former owner is fighting in federal district court.  The
     Company expects to recover in full.

(d)  As to environmental issues, neither the Company nor any of
     its subsidiaries is named a potentially responsible party at
     any site.  The Company, however, did undertake, as part of
     the 1988 divestiture of a petrochemical engineering
     subsidiary, an obligation to install and operate a soil and
     water remediation system at a subsidiary research facility
     site in New Jersey.  The Company is required to pay the
     costs of continued operation of the remediation system
     through 1996 (see Note 13).  In addition, the Company,
     pursuant to the sale of the Commercial Aviation Business, is
     responsible for the costs of clean-up of environmental
     conditions at certain designated sites.  Such costs may
     include the removal and subsequent replacement of
     contaminated soil, concrete, tanks, etc. that existed prior
     to he sale of the Commercial Aviation Business (see Note 2).

(e)  The Company is a party to other civil and contractual
     lawsuits which have arisen in the normal course of business
     for which potential liability, including costs of defense,
     which constitute the remainder of the $120,000,000 discussed
     above. The estimated probable liability for these issues is
     approximately $10,000,000 and is substantially covered by
     insurance.  The Company has recorded an offsetting asset
     (Other Assets) and liability (long-term liability) of
     $10,000,000 million at December 31, 1995 for these items.

     The Company has recorded its best estimate of the aggregate
liability that will result from these matters.  While it is not
possible to predict with certainty the outcome of litigation and
other matters discussed above, it is the opinion of the Company's
management, based in part upon opinions of counsel, insurance in
force and the facts currently known, that liabilities in excess
of those recorded, if any, arising from such matters would not
have a material adverse effect on the results of operations,
consolidated financial position or liquidity of the Company over
the long-term.  However, it is possible that the timing of the
resolution of individual issues could result in a significant
impact on the operating results and/or liquidity for an
individual future reporting period.

     The major portion of the Company's business involves
contracting with departments and agencies of, and prime
contractors to, the U.S. Government, and such contracts are
subject to possible termination for the convenience of the
government and to audit and possible adjustment to give effect to
unallowable costs under cost-type contracts or to other
regulatory requirements affecting both cost-type and fixed-price
contracts.  In addition, the Company is occasionally the subject
of investigations by the Department of Justice and other
investigative organizations, resulting from employee and other
allegations regarding business practices.  In management's
opinion, there are no outstanding issues of this nature at
December 31, 1995 that will have a material adverse effect on the
Company's consolidated financial position, results of operations
or liquidity.

(21) Business Segment

     The Company operates in one line of business: that of providing
management, technical and professional services to primarily
government organizations in support of the customers' operations
and/or facilities on a turn-key (full) service basis.

     The Company does not have significant foreign operations or
assets outside the United States.  The largest single customer of
the Company is the U.S. Government.  The Company had prime contract
revenues from the U.S. Government of $769 million in 1995, $723
million in 1994 and $663 million in 1993.  Included in revenues from
the U.S. Government are revenues from the Department of Defense of
$504 million in 1995, $487 million in 1994 and $539 million in 1993.
No other customer accounted for more than 10% of revenues in any
year.

(22)  Quarterly Financial Data (Unaudited)

     A summary of quarterly financial data for 1995 and 1994 is as follows
(in thousands, except per share data):

<TABLE>
<CAPTION>


                                                   1995 Quarters                               1994 Quarters
                                      First     Second  Third (a)  Fourth(b)      First     Second      Third  Fourth(c)
<C>                                <S>        <S>        <S>        <S>        <S>        <S>        <S>        <S>
Revenues                           $211,636   $209,940   $244,592   $242,557   $192,589   $198,573   $205,764   $221,757
Gross profit                          7,815      9,816      9,785      9,838      7,352      9,481      9,665      9,090
Earnings (loss) from continuing
  operations before income taxes,
   minority interest and
  extraordinary item                   (801)     1,522      1,120     (4,402)    (1,370)       626        322     (1,036)
Minority interest                       302        355        286        312        249        311        226        344
Discontinued operations                (347)        80        252         (5)        16       (710)    (2,772)    (9,013)
Net earnings (loss)                  (1,549)       674      1,227      2,016     (1,589)      (930)    (4,245)    (6,067)
Earnings (loss) per common share:
  Primary and fully diluted:
    Continuing operations          $  (0.12)  $   0.01   $   0.24   $   0.13   $  (0.36)  $  (0.10)  $  (0.24)  $   0.32
    Discontinued operations           (0.03)      0.01       0.02          -          -      (0.11)     (0.35)     (1.14)
    Extraordinary item                (0.01)         -      (0.20)     (0.01)         -          -          -          -
    Net earnings (loss) for
      common stockholders          $  (0.16)  $   0.02   $   0.06   $   0.12   $  (0.36)  $  (0.21)  $  (0.59)  $  (0.82)



<FN>

Quarterly financial data may not equal annual totals due to rounding.

Quarterly earnings per share data will not equal annual total.

(a)  1995 Third Quarter includes:

   -   $3,300,000 reversal of income tax reserves (see Note 14)
   -   $2,656,000 loss, net of tax, on extinguishment of debt (Note 5)

(b)1995 Fourth Quarter includes:

   -   $4,362,000 accrual for losses and reserves related to the Company's
       Mexican operations (see Management's Discussion and Analysis of
       Financial Condition and Results of Operations - Gross Margins)
   -   $2,400,000 accrual for legal fees related to the defense of a lawsuit
       filed by a subcontractor of a former electrical contracting subsidiary
       (see Notes 13 and 20)
   -   $5,300,000 accrual for uninsured costs related to a former
       subsidiary's use of asbestos products  (see Notes 13 and 20)
   -   $4,407,000 reversal of income tax reserves (see Note 14)

(c)1994 Fourth Quarter includes:

   -   $3,250,000 write-off of investment in unconsolidated subsidiary (see
       Note 13)
   -   $2,665,000 accrual for legal fees related to the defense of a lawsuit
       filed by a subcontractor of a former electrical contracting subsidiary
       (see Notes 13 and 20)
   -   $1,830,000 credit for reversal of legal costs accrued in the fourth
       quarter of 1993 (see Note 13)
   -   $4,069,000 reversal of income tax reserves (see Note 14)

(23)    Subsequent Events

     In March 1996, the Company amended and restated its existing $20.0 million
line of credit with Citicorp North America, Inc. to provide for a $50.0
million revolving credit facility which will provide working capital and
capital expenditures financing.  The facility matures in four years, with no
payments required until the end of the second year.  The credit agreement
contains the customary restrictive covenants for such a loan, but, if the
Company meets its projections, Management does not believe that any of the
covenants would be unduly restrictive.


ITEM 9  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

        None

                            PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

Herbert S. Winokur, Jr., 52   Nominee.  Director  and  Chairman  of the  Board
                        since 1988,  term  expires  1996.  President,  Winokur
                        Holdings,  Inc. (investment company).  Formerly Senior
                        Executive  Vice  President,   Member,  Office  of  the
                        President,  and  Director,  Penn Central  Corporation.
                        Director  of  ENRON  Corporation;  NacRe  Corp.;  NHP,
                        Inc.; and Marine Drilling Companies, Inc.

Dan R. Bannister, 65*   Director   since  1985,   term  expires  1998.   Chief
                        Executive  Officer since 1985;  President  since 1984.
                        Director of Industrial Training Corporation.

T.Eugene Blanchard, 65* Director since 1988,  term expires 1997.  Senior
                        Vice President and Chief Financial Officer since 1979.

Russell E.  Dougherty,  75 Nominee.  Director  since 1989,  term
                        expires 1996. Attorney,  McGuire, Woods, Battle & Boothe
                        (law firm).  Retired  General,  United States Air Force;
                        served as Commander-in-Chief,  Strategic Air Command and
                        Chief of Staff,  Allied  Command,  Europe.  From 1980 to
                        1986  served  as  Executive  Director  of the Air  Force
                        Association and Publisher of Air Force Magazine.  Former
                        member of the  Defense  Science  Board;  Trustee  of the
                        Institute for Defense Analysis; Trustee of The Aerospace
                        Corp.

Paul V. Lombardi, 54*   Director since July,  1994,  term expires 1997.  Chief
                        Operating  Officer  since  November,  1995;  Executive
                        Vice  President  since 1994;  Vice  President  1992 to
                        1994;  President  of  Federal  Sector  1994  to  1995,
                        President of Government  Services  Group 1992 to 1994.
                        Senior  Vice  President  and  Group  General  Manager,
                        Planning  Research  Corporation  from  1990  to  1992.
                        Senior  Vice  President  and  Group  General  Manager,
                        Advanced Technology Inc. from 1988 to 1990.

Dudley C. Mecum II, 61  Director  since  1988,  term  expires  1997.  Partner,
                        G.L.  Ohrstrom & Co.  (investment  company).  Formerly
                        Chairman  of Mecum  Associates,  Inc.  Served as Group
                        Vice President and Director,  Combustion  Engineering,
                        Inc.   Director  of  The  Travelers  Group,   Lyondell
                        Petrochemical   Company,   Vicorp   Restaurants  Inc.,
                        Fingerhut Companies,  Inc., Roper Industries Inc., and
                        Harrow Industries Inc.

David L.Reichardt, 53*  Director  since 1988,  term expires
                        1998.  Senior Vice  President and General  Counsel since
                        1986.  President of Dynalectric Company, a subsidiary of
                        DynCorp,  from 1984 to 1986.  Vice President and General
                        Counsel of DynCorp from 1977 to 1984. Director, Advanced
                        Communication and Information Services, L.L.C.

OTHER EXECUTIVE OFFICERS

Robert B. Alleger, Jr., 50*   Vice President since February,  1996.  President
                        of  Aerospace   Technology   Strategic  Business  Unit
                        ("SBU")  since   February,   1996.   Vice   President,
                        Systems Support  Services,  Lockheed Martin  Services,
                        Inc.  from 1992 to  February,  1996.  Vice  President,
                        Business Development,  GE Government Services, General
                        Electric Company from 1989 to 1992.

Gerald A. Dunn, 62*     Vice President since 1973; Controller since 1967.

Mark C. Filteau,  45*   Vice President since 1994. President of
                        Information and  Engineering  Technology SBU since 1994.
                        President  of  Planning  Research  Corporation,   Public
                        Sector from 1992 to 1994. Vice President and Senior Vice
                        President of BDM International from 1986 to 1992.

Charles L. Hendershot,37  Vice President, Contract
                        Administration  & Operational  Reporting  since February
                        1996. Vice President & Controller,  Government  Services
                        Group from 1990 to 1995;  Vice  President &  Controller,
                        Federal Sector from 1995 to 1996.

H. Montgomery Hougen, 60      Vice President since 1994;  Corporate  Secretary
                        and Deputy General Counsel since 1984.

Richard A. Hutchinson, 51     Treasurer since 1978.

Marshal J. Hyman,  50   Vice  President  since  1993;  Director of
                        Taxes since 1986.

James A. Mackin, 48     Vice President, Labor Relations & Employee
                        Benefits since February,  1996.  Vice  President,  Human
                        Resources,  Federal  Sector  from  1995  to  1996;  Vice
                        President,  Human Resources,  Government  Services Group
                        from 1986 to 1995.

Marshall S. Mandell, 53 Vice President,  Business Development since 1994; Vice
                        President,   Business  Development,   Applied  Science
                        Group  from  1992  to  1994.  Senior  Vice  President,
                        Eastern Computers,  Inc. from 1991 to 1992; President,
                        Systems Engineering Group,  Ogden/Evaluation  Research
                        Corporation from1984 to 1991.

Carl H. McNair, Jr., 62*  Vice   President   since  1994;
                        President,   Enterprise   Management   SBU  since  1994;
                        President, Support Services Division from 1990 to 1994.

Ruth  Morrel, 41        Vice President,  Law & Compliance since 1994;
                        Group General Counsel from 1984 to 1994.

Henry H. Philcox, 54    Vice  President  and Chief  Information  Officer since
                        August,  1995.  Chief  Information  Officer,  Internal
                        Revenue Service from 1990 to June, 1995.

Richard E. Stephenson, 60  Vice   President,   Technology  &
                        Government   Relations   since  1994;   Vice   President
                        Strategic Planning,  Government Services Group from 1991
                        to 1994.

Robert G. Wilson, 54    Vice President and General Auditor since 1985.

*     Officers  designated  by an  asterisk  are  deemed  to be  officers  for
      purposes of Rule 16a-1(f), as promulgated in Release No. 34-28869.

Stockholders Agreement

      Under the terms of the New  Stockholders  Agreement which expires on March
10, 1999, which has been adopted by substantially  all management  stockholders,
including the officers  named above,  the  management  stockholders  and outside
investors who control  approximately  53% of the voting stock on a fully diluted
basis  have  agreed  to the  following  procedure  for  election  of  directors.
Capricorn  Investors,  discussed  below, on behalf of itself and certain outside
investors nominates four directors; Company management nominates four directors;
and the two groups shall agree on a ninth director,  for whom all of the parties
have  agreed  to vote.  All of the  current  directors  and  nominees  have been
selected by this process.


ITEM 11.    EXECUTIVE COMPENSATION

Compensation

      The following table sets forth information  regarding annual and long-term
compensation  for the  chief  executive  officer,  the other  four  most  highly
compensated  executive  officers  of  the  Company,  and  an  additional  former
executive  officer.  The table does not include  information for any fiscal year
during  which a named  executive  officer did not hold such a position  with the
Company.


</TABLE>
<TABLE>
<CAPTION>


                                       SUMMARY COMPENSATION TABLE

                                                                  Long Term Compensation
                                           Annual Compensation     Awards     Payouts
(a)                           (b)     (c)       (d)      (e)       (f)          (g)       (h)       (i)
                                                        Other
                                                        Annual  Restricted  Securities            All Other
                                                        Compen-   Stock     Underlying   LTIP     Compen-
Name and Principal                   Salary     Bonus   sation   Award(s)    Options/  Payouts    sation
Position                     Year    ($)(1)    ($)(2)    ($)     ($)(3)        SARs      ($)       ($)(4)
<S>                          <C>    <C>       <C>       <C>     <C>        <C>         <C>         <C>
Dan R. Bannister             1995   325,853    165,000                                             13,535
President & Chief            1994   325,000    165,000                                             27,159
Executive Officer            1993   339,896    155,000                                             17,465


Paul V. Lombardi             1995   257,071    105,900                                              3,228
Executive Vice President &   1994   240,405    100,000                                             19,394
Chief Operating Officer      1993   219,663    100,000          107,940(5)                         11,960
Operating Officer

James H. Duggan              1995   265,593    75,000                                              57,088(6)
Executive Vice President(6)  1994   243,147    90,000                                              19,875
                             1993   248,736    90,000                                              12,813

T. Eugene Blanchard          1995   207,866    88.300                                               6,167
Senior Vice President &      1994   196,915    95,000                                              19,876
Chief Financial Officer      1993   200,591    90,000                                              17,018


David L. Reichardt           1995   206,008    88,300                                               2,872
Senior Vice President &      1994   190,547    95,000                                              17,906
General Counsel              1993   193,371    90,000                                              11,793


Mark C. Filteau              1995    185,01    83,500                                               1,758
Vice President & Business    1994     7,116    40,000           145,600(7)                            199
Unit President               1993       n/a       n/a                                                 n/a

<FN>

(1)   1993 salary included special year-end adjustment.

(2)   Column (d) reflects bonuses earned and expensed during year,  whether paid
      during or after such year.

(3)   Value of restricted  stock units  determined in accordance with Restricted
      Stock Plan.  There is no provision to pay  dividends on  restricted  stock
      units.  The following table reflects the number of restricted  stock units
      in the respective  accounts of the named  individuals,  whether vested and
      deferred or unvested, and the aggregate valuation as of February 22, 1996.

            Name           No. of Units     Value ($)
       Dan R. Bannister      65,711          $952,810
       Paul V. Lombardi      14,238          $206,451
       James H. Duggan       42,664          $618,628
       T.Eugene Blanchard    59,172          $857,994
       David L.Reichardt     21,402          $310,329
       Mark C. Filteau        9,973          $144,609

(4)   Column  (i)  includes   individual's  pro  rata  share  of  the  Company's
      contribution  to the Employee  Stock  Ownership Plan Trust, a contributory
      pension  plan  in  which  substantially  all  of the  Company's  employees
      participate,  the amount of which has not been  calculated for 1995, as of
      the date of this report,  and the Company-paid  portion of group term-life
      insurance  and   split-premium   life  insurance   premiums  covering  the
      individual, as reflected in the following table.

                           ESOP Contributions($)      Insurance Premiums ($)
       Name               1995      1994     1993      1995    1994    1993
       Dan R. Bannister  see above 6,832    8,912    13,535  20,327   8,553
       Paul V. Lombardi      "     6,832    8,912     3,228  12,562   3,048
       James H. Duggan       "     6,832    8,912     7,088  13,043   3,901
       T. Eugene Blanchard   "     6,832    8,912     6,167  13,044   8,106
       David L. Reichardt    "     6,832    8,912     2,872  11,074   2,881
       Mark C. Filteau       "       199      n/a     1,758     n/a     n/a

(5)   14,238 shares vested December 31, 1995.

(6)   Mr. Duggan served as Executive  Vice  President  until  November 10, 1995.
      Column  (i)  includes  $50,000  special  payment  relating  to sale of the
      Commercial Aviation Business.

(7)   Up to 4,987  shares  vested  December  31,  1995,  but the exact number is
      dependent upon subsequent calculation of Company's 1995 performance.
      Up to 4,987 shares will vest December 31, 1996.

</TABLE>

<TABLE>
<CAPTION>
                                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

                                                                               Potential realizable
                                                                                value at assumed
                                                                              annual rates of stock
                                                                               price appreciation
                                  Individual Grants                             for option term
                        Number of      Percent of
                       securities     total options/   Exercise
                       underlying     SARS granted     or base
                       options/SARs   to employees      price       Expiration
       Name            granted (#)    in fiscal year    ($/Sh)         date      5% ($)   10% ($)
       (a)                (b)              (c)          (d)            (e)       (f)       (g)
<S>                      <C>              <C>           <C>          <C>        <C>       <C>
Dan R. Bannister         65,000           20.3%         14.90        11/10/02   394,290   918,840
Paul V. Lombardi         40,000           12.5%         14.90        11/10/02   242,640   565,440
James H. Duggan             n/a               -             -               -         -         -
T. Eugene Blanchard      18,000            5.6%         14.90        11/10/02   109,188   254,448
David L. Reichardt       25,000            7.8%         14.90        11/10/02   151,650   353,400
Mark C. Filteau          12,500            3.9%         14.90        11/10/02    75,825   176,700

</TABLE>

           AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                       AND FY-END OPTION/SAR VALUES

                                             Number of
                                             securities      Value of
                                             underlying    unexercised
                                            unexercised    in-the-money
                                            options/SARs  options/ SARs
                                             at fiscal      at fiscal
                                            year-end (#)    year-end ($)

                    Shares       Value
                 acquired on    realized    Exercisable/   Exercisable/
      Name       exercise (#)     ($)      Unexercisable  Unexercisable
      (a)            (b)          (c)           (d)            (e)
Dan R. Bannister     n/a          n/a        0   / 65,000   0    /     0
Paul V. Lombardi     n/a          n/a        0   / 40,000   0    /     0
James H. Duggan      n/a          n/a        0   /      0       n/a
T. Eugene Blanchard  n/a          n/a        0   / 18,000   0    /     0
David L. Reichardt   n/a          n/a        0   / 25,000   0    /     0
Mark C. Filteau      n/a          n/a        0   / 12,500   0    /     0


Compensation of Directors

      Non-employee  directors of the Company  receive an annual  retainer fee of
$16,500 as  directors  and $2,750 for each  committee  on which they serve.  The
Company also pays non-employee  directors a meeting fee of $1,000 for attendance
at each Board meeting and $500 for attendance at committee  meetings.  Directors
are reimbursed for expenses  incurred in connection  with attendance at meetings
and other Company functions.

Directors and Officers Liability Insurance

      The Company has purchased and paid the premium for insurance in respect of
claims against its directors and officers and in respect of losses for which the
Company may be required or  permitted  by law to indemnify  such  directors  and
officers. The directors insured are the directors named herein and all directors
of the  Company's  subsidiaries.  The  officers  insured  are all  officers  and
assistant  officers of the Company and its subsidiaries.  There is no allocation
or segregation  of the premium as regards  specific  subsidiaries  or individual
directors and officers.

Employment-Type Contracts

      In 1987, the Company entered into  change-in-control  severance agreements
with Messrs.  Bannister,  Duggan,  Blanchard,  Reichardt,  and Dunn, and certain
other  executive  officers of DynCorp,  and in 1995,  it entered  into a similar
agreement  with  Mr.  Lombardi  (the  "Severance  Agreements").  Each  Severance
Agreement provides that certain benefits,  including a lump-sum payment, will be
triggered if such  executive is terminated  following a change in control during
the term of that executive's Severance Agreement, unless such termination occurs
under certain circumstances set forth in the Severance Agreements. The Severance
Agreements expire on December 31, 1996, but they are automatically extended. The
amount  of such  lump sum  payment  would be equal to 2.99  times the sum of the
executive's  annual  salary and the average  annual amount paid to the executive
pursuant  to  certain  applicable  compensation-type  plans in the  three  years
preceding  the year in which the  termination  occurs.  Other  benefits  include
payment of any incentive  compensation  which has been  allocated or awarded but
not yet paid to the  executive  for a  fiscal  year or  other  measuring  period
preceding  termination  and a pro rata portion to the date of termination of the
aggregate value of incentive  compensation  awards for uncompleted periods under
such plans. Each Severance Agreement also provides that, if the aggregate of the
lump sum payment to the executive  and any other payment or benefit  included in
the  calculation of "parachute  payments"  within the meaning of Section 280G of
the  Internal  Revenue Code exceeds the amount the Company is entitled to deduct
on its federal income tax return,  the severance payments shall be reduced until
no portion of the  aggregate  termination  payments to the  executive  is not so
deductible or the severance payment is reduced to zero. The Severance Agreements
also provide that the Company will  reimburse  the  executive for legal fees and
expenses  incurred by the  executive  as a result of  termination  except to the
extent that the payment of such fees and  expenses  would not be, or would cause
any other portion of the aggregate termination payments not to be, deductible by
reason of Section 280G of the Code.

Compensation Committee Interlocks and Insider Participation

      The members of the Compensation Committee of the Board of Directors during
1995 were: Herbert S. Winokur, Jr., Chairman of the Board and Director;  Russell
E.  Dougherty,  Director;  and,  until  September 11, 1995,  Michael T. Masin, a
former Director.  None of the members are, or were,  current or former employees
of the Company,  and,  except for Mr. Winokur,  whose  relationship to Capricorn
Investors,  L.P.  ("Capricorn") is described  below,  none have any relationship
with the Company of the nature contemplated by Rule 404 of Regulation S-K.

      Mr.  Winokur is the  President  of Winokur  Holdings,  Inc.,  which is the
managing  partner of  Capricorn  Holdings,  G.P.,  which in turn is the  general
partner of Capricorn.  On February 12, 1992,  the Company  loaned  $5,500,000 to
Cummings  Point  Industries,  Inc.  ("CPI"),  a  Delaware  corporation  of which
Capricorn owned more than 10%. The  indebtedness was represented by a promissory
note (the "Note"),  bearing  interest at the annual rate of 17%,  which provided
that interest was payable quarterly but that interest payments could be added to
the  principal  of the  Note  rather  than  being  paid in  cash.  The  Note was
subordinated  to all  senior  debt of CPI.  The  Note was due six  months  after
issuance, but it was automatically extended for three-month periods. By separate
agreement,  Capricorn  agreed to purchase  the Note from the Company  upon three
months' notice,  for the amount of outstanding  principal plus accrued interest.
The purchase  obligation was secured by certain common stock and warrants issued
by the Company  and owned by  Capricorn.  The Note was repaid in full,  together
with accrued interest, on August 10, 1995.

      No  executive  officer of the Company  serves on the board of directors or
compensation  committee of any entity (other than  subsidiaries  of the Company)
whose  directors  or  executive  officers  served on the Board of  Directors  or
Compensation Committee of the Company.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Voting Securities

      As of February 26, 1996, the Company had 8,024,645  shares of Common Stock
and 123,711 shares of Class C Preferred  Convertible  Stock  outstanding,  which
constituted all the outstanding voting securities of the Company.  If all shares
issuable upon exercise of outstanding warrants, shares issuable upon exercise of
all vested  options,  shares  issuable upon  conversion of  outstanding  Class C
Preferred  Convertible  Stock and  exercise  of  related  warrants,  and  shares
issuable as a result of immediate  vesting and expiration of deferrals under the
Restricted  Stock  Plan were to be issued,  the  outstanding  voting  securities
following such dilution would consist of 12,847,020  shares of Common Stock (and
no shares of Class C Stock).  The following tables show beneficial  ownership of
issued  voting  shares  as a  percentage  of  currently  outstanding  stock  and
beneficial  ownership  of issued and issuable  shares as a percentage  of common
stock on a fully diluted basis  assuming all such  conversions,  exercises,  and
issuances.

Security Ownership of Certain Beneficial Owners

      The  following  table  presents  information  as  of  February  26,  1996,
concerning  the only  known  beneficial  owners of five  percent  or more of the
Company's Common Stock and Class C Preferred Stock.



                                      Amount  &         Amount  &
                                      Nature of         Nature of
                                      Ownership         Ownership
                                         of     Percent    of       Percent
Name and Address of         Title of Outstanding  of     Diluted  of Diluted
Beneficial Owner             Class     Shares    Class  Shares(3) Shares (3)
Trustees of the DynCorp     Common   6,113,249  76.2%   6,113,249     47.6%
Employee                             Direct(1)          Direct(1)
Stock Ownership Plan
("ESOP") Trust, c/o
DynCorp
2000 Edmund Halley Dr.
Reston, VA  22091

Capricorn Investors,        Common     292,369   3.6%   4,117,127     32.0%
L.P.(2)                                 Direct             Direct
72 Cummings Point Road
Stamford, CT  06902

Capricorn Investors,       Class C     123,711 100.0%        N/A         -
L.P.(2)                    Preferred    Direct
72 Cummings Point Road
Stamford, CT  06902

(1) Shares are held for the accounts of participants  in the ESOP.  Shares are
    voted in accordance with instructions  received from participants.  Shares
    as  to  which  no  instructions   are  received  are  voted  in  the  same
    proportions.

(2) Herbert S.  Winokur,  Jr.,  Chairman  of the Board and a  Director  of the
    Company, is the President of Winokur Holdings, Inc., which is the managing
    partner of Capricorn Holdings,  G.P., which in turn is the general partner
    of Capricorn Investors, L.P.

(3) Assumes  exercise  of all  outstanding  warrants,  exercise  of all vested
    options,  conversion of Class C Stock,  exercise of warrants issuable upon
    such  conversion,  full  vesting of all  remaining  Restricted  Stock Plan
    units, and distribution of all deferred units under Restricted Stock Plan.

Security Ownership of Management(1)

      Beneficial  ownership of the Company's equity  securities by directors and
nominees for election to the Board, and by all current officers and directors as
a group, is set forth below:


<TABLE>
<CAPTION>


                                      Amount  &                   Amount  &
                                      Nature of                          Nature of
                                      Ownership                          Ownership
                                         of               Percent            of          Percent
Name and Address of         Title of Outstanding            of            Diluted       of Diluted
Beneficial Owner             Class   Shares (2)          Class(3)        Shares(4)     Shares (3)(4)
<S>                          <C>      <C>                <C>       <C>                    <C>
D. R. Bannister              Common   306,072 Direct}      3.9%      371,783 Direct}       2.9%
President &                             7,644 Indirect}                7,644 Indirect}
Director

T. E. Blanchard              Common   146,019 Direct}      2.0%      205,191  Direct}      1.7%
Senior Vice                            14,608 Indirect}               14,608 Indirect}
President
& Director

R. E. Dougherty              Common     2,331  Direct        *         4,000   Direct        *
Director

P. V. Lombardi               Common     5,275 Direct}        *        19,513  Direct}        *
Executive Vice                            839 Indirect}                1,119 Indirect}
President &
Director

D. C. Mecum II               Common        --     --        --         4,000   Direct        *
Director

D. L. Reichardt              Common    70,710 Direct}      1.0%       88,738 Direct}         *
Senior Vice                            11,311 Indirect}               11,311 Indirect}
President
& Director

H. S. Winokur, Jr.(5)        Common   292,369 Indirect     3.6%    4,117,127 Indirect     32.0%
Chairman of the              Class C  123,711 Indirect   100.0%        n/a                  --
Board & Director            Preferred

All officers and             Common   707,692 Direct}     13.5%      935,706 Direct}      40.0%
directors as a                        371,926 Indirect}            4,198,051 Indirect}
group
                             Class C  123,711 Indirect   100.0%        n/a       --         --
                            Preferred

<FN>

(1) Includes  information  as of February  26,  1996.  Shares held by the ESOP
    trustees and  allocated to the officers and  directors are included in the
    table, as outstanding  shares in the case of vested shares, and as diluted
    shares in the case of unvested shares.

(2) Restricted  stock  units  which  have not been  vested or are  vested  but
    deferred and not distributed  pursuant to the Company's  Restricted  Stock
    Plan as of February 26, 1996 are not  transferable by or within the voting
    control of the  participants.  Such units are not included in  outstanding
    shares but are included in fully diluted shares.

(3) An asterisk  indicates that beneficial  ownership is less than one percent
    of the class.

(4) Assumes exercise of all outstanding warrants,  vesting and exercise of all
    outstanding  options,  conversion  of Class C Stock,  exercise of warrants
    issuable  upon such  conversion,  full  vesting  and  distribution  of all
    remaining Restricted Stock Plan units.

(5) Includes  securities  owned  by  Capricorn.   See  preceding  table  for
    relationship of Mr. Winokur thereto.


</TABLE>

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Mr.  Dougherty is of counsel to the law firm of McGuire,  Woods,  Battle &
Boothe, which firm has provided legal services to the Company from time to time.

      Officers and  directors  who  obtained  securities  through the  Company's
Management  Employees Stock Purchase Plan and Restricted  Stock Plan are subject
to the New Stockholders  Agreement  described above.  Under the terms of the New
Stockholders Agreement,  the Company's securities cannot be sold individually to
outside  parties.  Management  employees  of the  Company  whose  employment  is
terminated may elect to retain their securities  indefinitely,  or under certain
circumstances may be required to sell such securities,  at the fair market price
established  by the  Board  of  Directors  from  time  to  time,  to  the  other
stockholders  or to the Company,  and the Company is required to repurchase such
securities at such price,  subject to restrictions imposed by its Certificate of
Incorporation and various financing agreements.

      See  also  Item  11,  "Compensation  Committee  Interlocks  and  Insider
Participation".

                            PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Form 10-K:

1.   All financial statements.

2.   Financial statement Schedules.

     Schedule I - Condensed Financial Information of Registrant
        DynCorp (Parent Company)
         Balance Sheets
            Assets
            Liabilities and Stockholders' Accounts
         Statements of Operations
         Statements of Cash Flows
         Notes to Condensed Financial Statements

     Schedule II - Valuation and Qualifying Accounts for the
       Years Ended December 31, 1995, 1994, and 1993.

     All other financial schedules not listed have been omitted
     since the required information is included in the Consolidated
     Financial Statements or the notes thereto, or is not applicable
     or required.

3.   Exhibits

     Exhibit 3

     (1) Certificate of Incorporation, as currently in effect,
           consisting of Restated Certification of Incorporation

     (2) Registrant's By-laws as amended to date

     Exhibit 4

     (1) Specimen 16% Pay-in-Kind Junior
           Subordinated Debentures due 2003 Certificate.
           (incorporated by reference to Registrant's
           Form 10-K for 1988, File No. 1-3879)

     (2) Indenture for $100,000,000 of 8.54% Contract Receivables
           Collateralized Notes, Series 1992-1, Due 1997, dated
           as of January 1, 1992, between Dyn Funding Corporation
           (wholly owned subsidiary of the Registrant) and Bankers
           Trust Company, as trustee (incorporated by reference to
           Registrant's Form 8-K filed February 7, 1992, File No. 1-3879)

     (3) Specimen 18% Class C Preferred Stock Certificate.
           (incorporated by reference to Registrant's
           Form 10-K for 1988, File No. 1-3879)

     (4) Specimen Common Stock Certificate.
           (incorporated by reference to Registrant's
           Form 10-K for 1988, File No. 1-3879)

     (5) Specimen Class A Common Stock Warrant Certificate.
           (incorporated by reference to Registrant's
           Form 10-K for 1988, File No. 1-3879)

     (6) Specimen Class B Common Stock Warrant Certificate.
           (incorporated by reference to Registrant's
           Form 10-K for 1988, File No. 1-3879)

     (7) Indenture Agreement for 16% Pay-in-kind Junior Subordinated
           Debenture (incorporated by reference to Exhibit 4.1 to
           Form S-4 filed July 27, 1988)

     (8) Statement Respecting Warrants and Lapse of Certain Restrictions
           (incorporated by reference to Registrant's
           Form 10-K for 1988, File No. 1-3879)

     (9) Amendment (effective March 26, 1991) to Statement Respecting
           Warrants and Lapse of Certain Restrictions (incorporated by
           reference to Registrant's Form 10-K for 1990, File No. 1-3879)

     (10)Article Four of the Restated Certificate of Incorporation
           (incorporated by reference to Registrant's Form 10-K for 1992,
           File No. 1-3879)

     (11)Amended and Restated Credit Agreement by and among
           Citicorp North America, Inc. and DynCorp dated March 14, 1996.

The Registrant, by signing this Report, agrees to furnish the Securities and
Exchange Commission, upon its request, a copy of any instrument which
defines the rights of holders of long-term debt of the Registrant.

     Exhibit 10

     (1) Deferred Compensation Plan
           (incorporated by reference to Registrant's Form 10-K for 1987,
           File No. 1-3879)

     (2) Management Incentive Plan (MIP)
           (incorporated by reference to Registrant's Form 10-K for 1993,
           File No. 1-3879)

     (3) DynCorp Executive Incentive Plan (EIP)
           (incorporated by reference to Registrant's Form 10-K for 1994,
           File No. 1-3879)

     (4) Management Severance Agreements
           (incorporated by reference to Exhibits (c)(4) through (c)(12)
           to Schedule 14D-9 filed by Registrant January 25, 1988.

     (5) Employment agreement of Richard L. Webb, Vice President,
           Aviation Services, dated June 24, 1992 (incorporated by
           reference to Registrant's Form 10-K for 1992, File No. 1-3879)

     (6) Employment agreement of Paul V. Lombardi,
           Vice President, Government Services Group
           (incorporated by reference to Registrant's Form 10-K for 1993,
           File No. 1-3879)

     (7) Restricted Stock Plan
           (incorporated by reference to Registrant's Form 10-K for 1993,
           File No. 1-3879)

     (8) Stock Option Plan

     Exhibit 11

     (1) Computations of Earnings Per Common Share for the
           Years Ended December 31, 1995, 1994, and 1993

     Exhibit 21

     (1) Subsidiaries of the Registrant

     Exhibit 24

     (1) Consent of Independent Public Accountants

         (b)  Reports on Form 8-K

         None filed during the fourth quarter
         ended December 31, 1995

                              SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                              DYNCORP

March 22, 1995                          By: D. R. Bannister
                                            D. R. Bannister
                                            President and Chief
                                            Executive Officer

  Pursuant to the requirements of the Securities and Exchange Act of
1934, this report is signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.



D. R. Bannister                 President and Director           March 22, 1995
D. R. Bannister                  (Principal Executive Officer)

P. V. Lombardi                  Executive Vice President         March 22, 1995
P. V. Lombardi                   and Director

T. E. Blanchard                 Senior Vice President            March 22, 1995
T. E. Blanchard                   Chief Financial Officer
                                  and Director

D. L. Reichardt                 Senior Vice President            March 22, 1995
D. L. Reichardt                  General Counsel and Director

G. A. Dunn                      Vice President and Controller    March 22, 1995
G. A. Dunn                       (Principal Accounting Officer)

D. C. Mecum II                  Director                         March 22, 1995
D. C. Mecum II

H. S. Winokur, Jr.              Director                         March 22, 1995
H. S. Winokur, Jr.



                           DynCorp (Parent Company)
            SCHEDULE I - Condensed Financial Information of Registrant
                               Balance Sheets
                           (Dollars in Thousands)

                                                                  December 31,
                                                                 1995   1994(a)
Current Assets:
  Cash and short-term investments                            $ 30,352  $  6,358
  Accounts receivable and contracts in process,
    net of allowance for doubtful accounts (Note 3)            28,170    32,481
  Inventories of purchased products and supplies                1,166       722
  Other current assets                                          6,674     4,787
    Total current assets                                       66,362    44,348

Investment in and advances to subsidiaries and affiliates      34,154    58,975

Property and Equipment, net of accumulated depreciation
   and amortization                                             7,340     7,899

Intangible Assets, net of accumulated amortization             32,887    35,753

Other Assets                                                    8,690     6,602

Net Noncurrent Assets of Discontinued Operations                    -    57,434

       Total                                                 $149,433  $211,011



(a) Restated for the discontinuance of the Commercial Aviation business.

    The "Notes to Consolidated Financial Statements" of DynCorp and
    Subsidiaries are an integral part of these statements.

    See accompanying "Notes to Condensed Financial Statements"


                           DynCorp (Parent Company)
            SCHEDULE I - Condensed Financial Information of Registrant
                               Balance Sheets
                           (Dollars in Thousands)

                                                                  December 31,
                                                                 1995    1994(a)
Current Liabilities:
  Notes payable and current portion of
    long-term debt (Note 2)                                  $    902  $  2,636
  Accounts payable                                             24,614     9,998
  Advances on contracts in process                              1,033     2,711
  Accrued liabilities                                          80,836    62,637
  Net current liabilities of discontinued operations                -       283
  Total current liabilities                                   107,385    78,265

Long-Term Debt (Note 2)                                           662   108,502

Other Liabilities and Deferred Credits                         15,524    14,706

    Total Liabilities                                         123,571   201,473

Contingencies and Litigation                                        -         _

Redeemable Common Stock, at Redemption Value                  129,843   121,170

Preferred Stock, Class C                                        3,000     3,000

Common Stock                                                      159        81

Common Stock Warrants                                          11,305    11,486

Unissued Common Stock under restricted stock plan               5,908     9,923

Paid-in Surplus                                                13,122      (106)

Deficit                                                      (115,888) (118,256)

Common Stock Held in Treasury                                 (21,084)   (8,817)

Unearned ESOP Shares                                             (503)        -

Cummings Point Industries Note Receivable                           -    (8,943)

  Total                                                      $149,433  $211,011

(a) Restated for the discontinuance of the Commercial Aviation
    business.

    The "Notes to Consolidated Financial Statements" of DynCorp and
    Subsidiaries are an integral part of these statements.

    See accompanying "Notes to Condensed Financial Statements."



                          DynCorp (Parent Company)
            SCHEDULE I - Condensed Financial Information of Registrant
                          Statements of Operations
                           (Dollars in Thousands)

                                                For the Years Ended December 31,
                                                     1995    1994(a)    1993(a)
Revenues                                         $584,021   $536,836   $552,662

Costs and Expenses:
  Cost of services                                570,808    514,711    528,776
  Selling and corporate administrative             12,552     11,894     13,133
  Interest expense                                  5,375      4,643      4,350
  Interest income                                  (2,759)    (1,945)    (1,969)
  Other (Note 3)                                   22,583     29,732     22,479
                                                  608,559    559,035    566,769
Loss from continuing operations before
  income taxes, equity in net income of
  subsidiaries and extraordinary item             (24,538)   (22,199)   (14,107)
  Benefit for income taxes                        (25,340)    (8,952)    (1,561)
Earnings (loss) from continuing operations before
  equity in net income of subsidiaries and
  extraordinary item                                  802    (13,247)   (12,546)
  Equity in net income of subsidiaries              4,472     12,895      8,061
Earnings (loss) from continuing operations before
  extraordinary item                                5,274       (352)    (4,485)
  Loss from discontinued operations, net of
    income taxes                                      (20)   (12,479)    (8,929)
Earnings (loss) before extraordinary item           5,254    (12,831)   (13,414)
  Extraordinary loss from early extinguishment
    of debt                                        (2,886)         -          -
Net earnings (loss)                              $  2,368   $(12,831)  $(13,414)

  Preferred Class C dividends not declared
    or recorded                                    (1,915)    (1,606)    (1,347)

Common stockholders' share of earnings (loss)    $    453   $(14,437)  $(14,761)


(a) Restated for the discontinuance of the Commercial Aviation
    business.

    The "Notes to Consolidated Financial Statements" of DynCorp and
    Subsidiaries are an integral part of these statements.

    See accompanying "Notes to Condensed Financial Statements."


                               DynCorp (Parent Company)
              SCHEDULE I - Condensed Financial Information of Registrant
                               Statements of Cash Flows
                                (Dollars in Thousands)

                                                For the Years Ended December 31,
                                                        1995   1994(a)   1993(a)
Cash Flows from Operating Activities:
 Net loss                                           $  2,368 $(12,831) $(13,414)
 Adjustments to reconcile net loss from operations
 to net cash (used) provided by operating activities:
   Depreciation and amortization                       5,437    5,911     6,413
   Pay-in-kind interest on Junior Subordinated
    Debentures                                             -   15,329    13,142
   Loss, before tax, on purchase of Junior
    Subordinated Debentures                            4,786        -         -
   Loss from discontinued operations                      20   12,479     8,929
   Deferred income taxes                               2,707      (59)      521
   Accrued compensation under Restricted Stock Plan        -     (329)    2,047
   Noncash interest income                                 -   (1,375)   (1,158)
   Change in reserves of businesses divested in 1988   7,700    2,318     1,738
   Other                                              (2,021)    (923)   (1,692)
   Change in assets and liabilities, net of acquisitions
     and dispositions:
      (Increase) decrease in accounts receivable and
        contracts in process                           4,311  (11,758)   (2,570)
      Increase in inventories                           (445)    (209)      (93)
      (Increase) decrease in other current assets     (1,886)  (1,069)    1,992
      Decrease in current liabilities except notes
        payable and current portion of long-term debt (5,994) (10,003)   (7,609)
 Cash provided (used) by continuing operations        16,983   (2,519)    8,246
 Cash (used) provided by discontinued operations      (1,416)  (2,946)   (7,495)
   Cash provided (used) by operating activities       15,567   (5,465)      751

Cash Flows from Investing Activities:
 Sale of property and equipment                           27      660       829
 Purchase of property and equipment,
  net of capitalized leases                           (1,926)   1,734      (928)
 Proceeds received from notes receivable               8,943        -         -
 Proceeds from sale of discontinued operations       135,700        -         -
 Investing activities of discontinued operations     (41,669)       -         -
 Increase in investments in affiliates                     -    1,500         -
 Cash on deposit for letters of credit                (3,307)     (21)   (2,916)
 Other                                                  (229)    (617)      345
   Cash provided (used) from investing activities     97,539    3,256    (2,670)

Cash Flows from Financing Activities:
 Treasury stock purchased                            (12,267)  (3,182)   (1,979)
 Payment on indebtedness                              (6,659)  (3,349)   (4,219)
 Treasury stock sold                                       -      159        46
 Redemption of Junior Subordinated Debentures       (105,971)       -         -
 Stock released to Employee Stock Ownership Plan      17,497   17,100    16,116
 Financing activities of discontinued operations           -     (652)     (506)
 Other financing transactions                           (864)      49         -
 Change in intercompany balances, net                 19,152   (5,536)   (9,383)
   Cash (used) provided from financing activities    (89,112)   4,589        75

Net Increase (Decrease) in Cash and Short-term
 Investments                                          23,994    2,380    (1,844)
Cash and Short-term Investments at Beginning
 of the Year                                           6,358    3,978     5,822
Cash and Short-term Investments at End of
 the Year                                           $ 30,352 $  6,358  $  3,978

(a) Restated for the discontinuance of the Commercial Aviation business.

    The "Notes to Consolidated Financial Statements" of DynCorp and
    Subsidiaries are an integral part of these statements.

    See accompanying "Notes to Condensed Financial Statements."


                    DynCorp (Parent Company)
      SCHEDULE I - Notes to Condensed Financial Statements
                       December 31, 1995

1.  Basis of Presentation

    Pursuant to the rules and regulations of the Securities
and Exchange Commission, the Condensed Financial Statements of
the Registrant do not include all of the information and notes
normally included with financial statements prepared in
accordance with generally accepted accounting principles.  It
is, therefore, suggested that these Condensed Financial
Statements be read in conjunction with the Consolidated
Financial Statements and Notes included elsewhere in this
Annual Report on Form 10-K.

2.  Long-term Debt

At December 31, 1995 and 1994, long-term debt consisted of (in thousands):

                                                                 1995      1994
  Junior Subordinated Debentures, net of unamortized
    discount of $4,793 in 1994                               $      -  $102,658
  Notes payable, due in installments through 2002,
    9.88% weighted average interest rate                        1,564     6,968
  Capitalized equipment leases                                      -     1,512
                                                                1,564   111,138
  Less current portion                                            902     2,636
                                                              $   662  $108,502

  Maturities of long-term debt as of December 31, 1995, were as follows
  (in thousands):

                      1996                      $  902
                      1997                         203
                      1998                         126
                      1999                         143
                      2000                         161
                      Thereafter                    29
                                                $1,564

3.  Accounts Receivable

  At December 31, 1992, the Company had sold $63,682,000 of
its accounts receivable to Dyn Funding Corporation (DFC), a
wholly owned subsidiary of the Company.  DFC was established
in January, 1992 to issue $100,000,000 of Contract Receivable
Collateralized Notes (Notes) and to purchase eligible accounts
receivable from the Company and its subsidiaries.  On an
ongoing basis, the cash received by DFC from collection of the
receivables is used to make interest payments on the Notes,
pay a servicing fee to the Company and purchase additional
receivables from the Company (see Note 5 to Consolidated
Financial Statements included elsewhere in this Annual Report
on Form 10-K).

  The Company receives 97% of the face value of the accounts
receivable sold to DFC.  The 3% discount from the face value
of the accounts receivable is recorded as an expense by the
Company at the time of sale.  In 1995 and 1994, the Company
recorded as expense $16,406,000 and $16,032,000 which is
reflected in "Other" in the accompanying "Statements of
Operations" (in the "Consolidated Statements of Operations" of
DynCorp and Subsidiaries this expense is offset by the gain
recognized by DFC).


<TABLE>
<CAPTION>

                                   DynCorp and Subsidiaries
                        SCHEDULE II - Valuation and Qualifying Accounts
                     For the Years Ended December 31, 1995, 1994 and 1993
                                    (Dollars in Thousands)

                                       Balance at Charged to  Charged           Balance
                                       Beginning  Costs and  to Other  Deduct- at End of
        Description                    of Period  Expenses   Accounts   ions    Period
<C>                                    <S>      <S>           <S>       <S>     <S>
 Year Ended December 31, 1995
   Allowance for doubtful accounts     $       9   $     -    $    -    $   -   $   9

 Year Ended December 31, 1994
   Allowance for doubtful accounts (1) $       9   $     -    $    -    $   -   $   9

 Year Ended December 31, 1993
   Allowance for doubtful accounts (1) $       9   $     -    $    -    $   -   $   9


 (1) Restated for discontinuance of the Commercial Aviation business (see Note 2).

</TABLE>