GRC INTERNATIONAL, INC.
                         DIRECTORS FEE REPLACEMENT PLAN
1.       PURPOSE

         The loyal and dedicated service of "outside"  directors is essential to
the growth and progress of any public  company.  Accordingly,  the Directors Fee
Replacement  Plan (the "Plan") of GRC  International,  Inc. (the  "Company") has
been  adopted to better  enable the  Company  to retain  and  attract  qualified
outside  directors to serve on the Company's Board of Directors,  while reducing
the  Company's  cash outlay of  director's  fees.  The Plan is also  designed to
provide a stronger  nexus between the  contributions  made to the Company by its
outside directors and the value of the compensation they receive.

2.       ADMINISTRATION
         The Plan will be  administered  on a calendar  quarter basis.  The Plan
will be administered  by a committee of three or more persons (the  "Committee")
who will be appointed  by the Board of  Directors of the Company.  Awards of the
Company's  Common  Stock,  par value $.10 per share  ("Stock"),  and  options to
purchase  the Stock  ("Options"),  and the  amount  and  nature of the Stock and
Options so awarded,  will be  automatic,  as provided in Sections 5 and 6 of the
Plan.  All  questions of  interpretation  of the Plan will be  determined by the
Committee. Such determinations will be final and binding upon all persons having
an interest in the Plan.

3.       PARTICIPATION IN THE PLAN

         Directors who are not employees of the Company or any subsidiary of the
Company are eligible to participate in the Plan.

4.       STOCK SUBJECT TO THE PLAN

         4.1. Total Shares  Available.  Up to three hundred  thousand  (300,000)
shares  (subject  to  adjustment  under  Section  11 of the  Plan) of Stock  are
authorized for issuance  under the Plan.  Such shares of Stock may be issued (i)
outright,  or (ii) upon the  exercise of Options.  The total number of shares of
Stock awarded under (i) and (ii) shall not exceed 300,000. The Company may issue
authorized but unissued shares of its Stock,  may repurchase  shares in the open
market or in private transactions,  or may otherwise make a sufficient number of
shares available under the Plan. The Company shall not be required to reserve or
otherwise set aside funds or shares of Stock for the payment of its  obligations
hereunder.  The Company  shall make  available as and when required a sufficient
number of shares of Stock to meet the needs of the Plan.

         4.2. Unexercised or Expired Options. Upon the expiration or termination
of any  Option  under  the Plan,  the  Stock  allocable  to the  unexercised  or
surrendered  portion of such Option will revert to the Plan's pool of Stock, and
may thereupon become subject to Stock and Options subsequently awarded under the
Plan.

5.       AWARDS OF STOCK

         5.1. Fair Market Value of Stock. For purposes of determining the number
of shares of Stock to be awarded with respect to any calendar quarter,  the Fair
Market  Value of the Stock  shall be the average of the high and low sale prices
of the  Stock  quoted  on the New  York  Stock  Exchange  Composite  Transaction
Reporting  System for the Fridays of such  quarter.  If such sale prices are not
available for any such Friday,  then the average of the high and low sale prices
on the next preceding day on which such sale prices are available  shall be used
in lieu thereof. <PAGE>

         5.2. Election.  Quarterly awards of Stock will be made to each eligible
director  who has  submitted  to the  Committee  at  least 5 days  prior  to the
beginning  of the  calendar  quarter in  question a written  election to receive
Stock in lieu of all or any part of the compensation which is not being deferred
under any other plan and which otherwise  would have been payable  currently for
services rendered as a director  (including the director's  retainer and meeting
fees) and, where applicable,  as Chairman.  In the case of a new director,  such
election may be effective immediately if received within a reasonable time after
the director's election.  Each such election shall be effective until revoked by
a later written  election,  but no such later  election  shall become  effective
until  the  first  calendar  quarter  to begin at least 5 days  after  the later
election is received by the Company.

         5.3.  Stock Awards and Formula.  Shortly after the end of each calendar
quarter,  a director who has  previously  submitted an  appropriate  election to
receive Stock in  accordance  with Section 5.2 above shall receive a combination
of Stock and cash. One-half (1/2) of the director's compensation for the quarter
shall be payable in cash,  and  one-half  (1/2)  shall be payable in Stock.  The
number of shares of Stock to be awarded  shall be the nearest whole number which
most  closely  approximates  the  director's  compensation  for the  quarter  in
accordance with the following formula:

                           One-Half (1/2) of Director's                 Number
                  Applicable Compensation for the Quarter    =        of Shares
                  ---------------------------------------             of Stock
                            Fair Market Value of Stock

6.       AWARDS OF OPTIONS

         All Options awarded under the Plan will be "non-statutory options," and
therefore  are not entitled to special tax  treatment  under  Section 422 of the
Internal  Revenue  Code of 1986,  as it may be  amended  from  time to time (the
"Code").  Each  Option  awarded  under the Plan will be  evidenced  by a written
agreement  in such  form  as the  Committee  may  from  time  to  time  approve,
consistent with and subject to the following terms and conditions:

         6.1. Fair Market Value of Stock. For purposes of determining the number
of Options to be awarded with respect to any calendar  quarter,  the Fair Market
Value of the Stock for such  quarter  shall be the  average  of the high and low
sale  prices  of the  Stock  quoted  on the New York  Stock  Exchange  Composite
Transaction  Reporting  System  for the  Fridays of such  quarter.  If such sale
prices are not available  for any such Friday,  then the average of the high and
low sale  prices  on the  next  preceding  day on which  such  sale  prices  are
available shall be used in lieu thereof.

        6.2.  Exercise  Price of Options.  The  exercise  price of Options to be
awarded with respect to any calendar  quarter shall be twenty five percent (25%)
of the Fair Market Value of the Stock for such quarter.

         6.3.  Election.  Quarterly  awards  of  Options  will  be  made to each
eligible  director who has  submitted to the  Committee at least 5 days prior to
the beginning of the calendar  quarter in question a written election to receive
Options  in  lieu of all or any  part of the  compensation  which  is not  being
deferred  under  any other  plan and which  otherwise  would  have been  payable
currently for services rendered as a director (including the director's retainer
and meeting  fees) and,  where  applicable,  as  Chairman.  In the case of a new
director,  such  election  may be  effective  immediately  if received  within a
reasonable  time after the  director's  election.  Each such  election  shall be
effective until revoked by a later written election,  but no such later election
shall become effective until the first calendar quarter to begin at least 5 days
after the later election is received by the Company.

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<PAGE>

         6.4. Option Awards and Formula. As of the end of each calendar quarter,
there  shall  be  awarded  to each  director  who has  previously  submitted  an
appropriate  election in  accordance  with  Section 6.3 above the nearest  whole
number of Options which most closely  approximates  the director's  compensation
for the quarter in accordance with the following formula:

         Director's Applicable Compensation for the Quarter        =    Number
         -------------------------------------------------            of Options
  (Fair Market Value of Stock) Minus (Exercise Price of Options)

         6.5.  Exercise of Options.  Options may be  exercised at any time after
their grant.  To exercise an Option in whole or in part, the holder of an Option
("Optionee") shall give written notice of exercise to the Company's Stock Option
Administrator  specifying  the  number of shares as to which the Option is being
exercised,  accompanied  by payment in full of the Option  Price for such shares
either in cash or in such other  consideration  as approved by the  Committee in
its sole  discretion  including,  but not limited  to, (i) shares of  previously
owned Common Stock held by the Optionee for at least six (6) months,  or (ii) in
the event of  hardship  and with the  advance  approval  of the  Committee,  the
Company's retention of shares of Common Stock otherwise issuable to the Optionee
upon exercise.  Shares of Stock used to make payments under subsections (ii) and
(iii)  shall be valued  at the  average  of the high and low sale  prices of the
Stock  quoted on the New York Stock  Exchange  Composite  Transaction  Reporting
System on the date such notice is received by the Stock Option Administrator (or
if unavailable on such date, on the next preceding trading date), and the number
of shares to be required  for  payments  under (Ii) or (iii) shall be rounded to
the nearest  whole share so that no cash payment  shall be required by reason of
any fractional amount.

         6.6.     Termination of Options.
                  ----------------------

                  (a) Options awarded  pursuant to the Plan may not be exercised
after the third  anniversary  of a director's  termination as a director for any
reason,  including, but not limited to, such director's resignation or cessation
of service following a decision not to stand for reelection,  or his termination
as a director due to removal, death, disability or retirement. Any Options which
have not been  exercised  on or before such third  anniversary  shall  thereupon
expire.
                  (b)  Any  Option   awarded  a  director  under  the  Plan  and
unexercised,  in whole or in part,  on the date of his death may be exercised by
the personal  representative of the deceased  director's estate, or by any heir,
devisee,  or other taker who, by will or  operation  of law, is entitled to said
Option  or any  portion  thereof.  In each  such  case,  such  Option(s)  may be
exercised  at any time on or before  the  third  anniversary  of the  director's
death, as provided in Section 6.6(a).

         6.7. No  Shareholder  Rights By Reason of Options.  A director does not
have any rights  whatsoever  as a  shareholder  with respect to any  unexercised
Option until the date of the issuance to that director of a stock certificate(s)
for shares to be issued upon the proper  exercise of said Option.  No adjustment
will be made for dividends or other rights with respect to which the record date
occurs prior to the date such certificate is issued.

         6.8. Options Not Assignable Or Transferable.  Options awarded under the
Plan are not  assignable  or  transferable  other than by will or by the laws of
intestate succession.  During the lifetime of a director,  Options awarded under
the Plan will be exercisable only by that director.

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<PAGE>

7.       LIMITATION OF RIGHTS

        7.1. No Right to Continue as a Director.  Neither the Plan, the awarding
of any  Stock  or  Option,  nor any  other  action  taken  pursuant  to the Plan
constitutes  or is  evidence  of any  agreement  or  understanding,  express  or
implied,  that the Company  will retain a director  for any period of time or at
any particular rate of compensation.

         7.2. No Rights to Receive Stock or Options After Eligibility  Ceases. A
director has no rights to receive Stock or Options under the Plan,  and will not
receive any Stock or Options for any calendar quarter, or part thereof,  once he
or she: (i) becomes an employee of the Company or any subsidiary of the Company;
or (ii) ceases to be a director.

         7.3. Limitation on Rights of Optionee.  Except as expressly provided in
Section 9, an  Optionee  shall have no rights by reason of the  issuance  of (i)
shares of Stock pursuant to this Plan,  (ii) additional  shares of Stock,  (iii)
any other security or debenture convertible into Stock, (iv) or any other equity
security,  including  issuance pursuant to a plan of merger,  consolidation,  or
statutory share exchange, and no adjustment by reason thereof shall be made with
respect  to the number of shares of Stock  subject to an Option or the  exercise
price.

         7.4. Rights of the Company. The grant of an Option pursuant to the Plan
shall  not  affect  in any way the  right  or  power  of the  Company  to  issue
additional   shares   of   stock;   to  make   adjustments,   reclassifications,
reorganizations or changes in its capital or business structure;  to participate
in a merger,  consolidation,  or share exchange with another corporation;  or to
dissolve,  liquidate,  or sell or  transfer  all or any part of its  business or
assets.

8.       ADJUSTMENTS

         In the  event any  change  is made to the  Stock by  reason of  merger,
consolidation,  reorganization,  recapitalization,  stock dividend, stock split,
combination  of shares,  exchange of shares,  change in  corporate  structure or
otherwise,  including  but not  limited  to any  change  whereby  the  Stock  is
converted  into or  exchanged  for another  class of shares or shares of another
entity,  appropriate and comparable  adjustments  will be made to the number and
kind of shares  subject  to the Plan,  and to the  number and kind of shares and
price per share of Stock subject to outstanding  Options issued  pursuant to the
Plan, and the prices of Stock used in  calculating  the Fair Market Value of the
Stock under  Sections 5.1 and 6.1. All such  adjustments  will be made in such a
manner as avoids  dilution or enlargement  of the rights of directors  under the
Plan.

9.       AMENDMENT OF THE PLAN

         The Board of Directors of the Company may suspend or terminate the Plan
or revise or amend it in any respect whatsoever; provided that, without approval
of the  shareholders  of the Company,  no revision or  amendment  may change the
number of shares  subject to the Plan  (except as  provided  in Section 9 of the
Plan) or materially  increase the benefits  accruing to  participants  under the
Plan, and provided  further that no revision or amendment or termination  shall,
without  the  consent  of the  affected  director(s),  impair  the rights of any
director under any Option previously awarded.

10.      LEGAL RESTRICTIONS

         (a) The  Company  will not be  obligated  to issue  shares  of Stock if
counsel to the Company  determines  that such issuance  would violate any law or
regulation of any  governmental  authority or any agreement  between the Company
and any  national  securities  exchange  upon  which  the  Stock is  listed.  In
connection with any stock issuance or transfer,  the person acquiring the shares
shall, if requested by the Company, give assurances satisfactory to

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<PAGE>

counsel by the Company  regarding such matters as the Company may deem desirable
to assure compliance with all legal requirements.  The Company shall in no event
be obliged to take any action in order to cause the exercise of any Option.

         (b) Of the 150,000 new shares added to the Plan on January 28, 1999, no
single  director  may acquire  from these new shares more than  102,378  shares,
which is one percent of the shares outstanding as of January 28, 1999.

11.      RULE 16b-3 COMPLIANCE

         11.1.  Six-Month  Holding  Period.  Unless an Optionee could  otherwise
dispose of equity securities,  including derivative  securities,  acquired under
the Plan without  incurring  liability  under Section 16(b) of the Exchange Act,
equity  securities  acquired  under  the Plan  must be held for a period  of six
months  following the date of such  acquisition,  provided  that this  condition
shall be satisfied with respect to a derivative  security if at least six months
elapse from the date of acquisition  of the  derivative  security to the date of
disposition of the derivative  security (other than upon exercise or conversion)
or its underlying equity security.

         11.2.  Other  Compliance  Provisions.  The  Committee  shall  implement
transactions under the Plan and administer the Plan in a manner that will ensure
that each  transaction by an Optionee is exempt from liability under Rule 16b-3,
except that  Optionees  may be permitted  to engage in a non-exempt  transaction
under the Plan if written  notice has been given to the Optionee  regarding  the
non-exempt nature of the transaction. The Committee may authorize the Company to
repurchase  any  Option or shares of Stock  acquired  under the Plan in order to
prevent an  Optionee  from  incurring  liability  under  Section  16(b).  Unless
otherwise  specified by the Optionee,  equity securities,  including  derivative
securities,  acquired  under the Plan which are disposed of by an Optionee shall
be deemed to be disposed of in the order acquired by the Optionee.

12.      GOVERNING LAW

         The Plan will be governed, and its provisions construed,  in accordance
with the laws of the State of  Delaware  and  applicable  federal  law,  without
regard to conflicts of law.

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