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, 1997
                              or
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File Number 33-44510

                         CTA INCORPORATED
     (Exact name of registrant a specified in its charter)

     Colorado                           84-0797618
(State or other jurisdiction of      (I.R.S. Employer
 incorporation or organization)      Identification No.)

6116 Executive Boulevard, Rockville, MD     20852
(Address of principal executive offices) (Zip Code)

Registrant's telephone number,
 including area code                    (301)816-1200

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

                                   None

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

                                   None

     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.[ X ] Yes[   ] 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 the 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 ]

    As of February 28, 1998, there were outstanding  8,701,014  shares of
the registrant's common stock, par value $.01, which is the only class of
common  or voting stock of the registrant. The aggregate market value  of
the common stock held by non-affiliates of the registrant as of that date
was $43,940,121 as determined by independent appraisal.
                         CTA INCORPORATED

                    ANNUAL REPORT ON FORM 10-K

               FOR THE YEAR ENDED DECEMBER 31, 1997

                         TABLE OF CONTENTS

                              PART I
                                                       PAGE
ITEM 1.   BUSINESS

ITEM 2.   PROPERTIES

ITEM 3.   LEGAL PROCEEDINGS

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

                         PART II

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

ITEM 6.   SELECTED FINANCIAL DATA

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

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE

                         PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
          REGISTRANT

ITEM 11.  EXECUTIVE COMPENSATION

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED
          TRANSACTIONS

                         PART IV

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

SIGNATURES

<PAGE>

                         PART I

Item 1. Business

     The  Company  provides advanced Information Technology (IT) services
to the federal government,  state  and  local  government  and commercial
markets. The Company focuses on providing turn-key solutions  to  the  IT
service   needs   of  its  customers,  with  emphasis  on  legacy  system
modernization,  secure  computing  and  network  solutions,  applications
software and database maintenance and embedded computer applications.  In
addition to its strong technical and program management capabilities, the
Company has established  a  reputation  for  consistently  high levels of
customer satisfaction based on service, quality and value.

     Company History

     The  Company  was founded in 1979 as Computer Technology  Associates
Inc., specializing in  consulting  services  related to the evaluation of
computer systems embedded in larger systems such  as spacecraft, missiles
and  aircraft.  In  the  mid-1980's,  the  Company's consulting  business
expanded into systems integration of avionics,  command  and control, and
other  decision  support  systems. Originally qualified to receive  small
business  related  support  from  the  federal  government,  the  Company
established major relationships  with  U.S.  military  operations  at the
Defense  Department's  Cheyenne  Mountain  Complex, the Naval Air Warfare
Center, Weapons Division, NASA's Goddard Space  Flight Center and the Air
Force's Consolidated Space Operations Center. In  1992, the Company ended
its  eligibility  for government programs that assist  small  businesses,
with the last significant contract awarded under these programs completed
in early 1996. Since  1992,  the  Company  has replaced contracts awarded
under these assistance programs with contracts  awarded  under  full  and
open  competition.  The  share  of  IT  revenues derived from competitive
awards grew from 19% in 1992 to 100% in 1997.

     In the 1990's, the Company targeted  U.S.  government  IT  contracts
that have allowed it to broaden the Company's base of skills to include a
number  of  business  oriented  IT disciplines equally applicable to  the
federal civil agency and state government  IT  markets.  The Company then
established   strategic   alliances  with  certain  specialized  software
companies that enabled it to  enter  the  commercial  IT  market  and win
contracts  with commercial customers such as Cessna, Reynolds Metals  and
Allied-Signal.

     In 1992,  the Company acquired a 79% interest in CTA Space Systems
(CTASS) to expand its business from providing IT services related to space
systems to providing full turn-key space systems. In 1994, CTA acquired
the remaining minority interest    in   CTASS.  CTASS   pioneered   small
satellite-based store-and-forward   technology,   which   it   originally
developed  to interrogate dispersed buoys equipped with acoustic sensors.
In  1994, the Company  entered the commercial GEO communications satellite
market  with CTASS' award  of  the  contract  for the Indostar turn-key
direct-to-home (DTH) system from PT MediaCitra Indostar.  The  contract
provided for the Company to build a small, three-axis stabilized commercial
communications satellite,  which  was  launched  in  1997,  and a complete
facility  in Jakarta,   Indonesia   including  broadcast  and  subscriber
management software, communications  uplinking systems and hardware/software
systems for spacecraft telemetry, tracking and control. In late 1997, the
Company sold CTASS and certain related businesses to Orbital Sciences
Corporation in order to focus on its core  IT  business.  See Note 2 of
Notes to Consolidated Financial Statements.

Corporate Organization and Strategy

     In  1997,  the  Company  realigned  its  corporate  organization  to
maximize  its  focus  on   the  rapidly growing market for commercial and
governmental IT services. A streamlined  corporate  management  structure
supports  the  Federal  Information  Systems  Company,  a division of the
Company  which addresses the federal government market for  IT  services,
and  CTA  Commercial  Systems,  Inc.,  a  wholly-owned  subsidiary  which
addresses the  state  government  and commercial markets for IT services.
The Federal and Commercial companies  are,  therefore, free to tailor the
Company's  IT  products  and services to the unique  needs  and  business
practices of their respective markets.

Information Technology Services

     The Company believes  that  it possesses a level of IT technical and
project management experience and  expertise that allows it to offer high
value solutions to a wide range of client IT requirements.  The Company's
principal business focus is in the areas  of 1) legacy information system
modernization, to include Year 2000 compliance  upgrades  and  electronic
commerce   implementations,  2)  information  security,  to  include  the
engineering and implementation of secure and highly reliable computer and
network systems,  3) the maintenance and upgrade of applications software
and associated large  scale  databases  and  4)  a  range  of IT services
associated with complex embedded computer systems.

     The Company believes that it is one of the industry leaders  in  the
rapidly  growing  market  for  federal,  state  and  commercial Year 2000
compliance  upgrades  based  on  its  combination  of  direct  Year  2000
conversion  experience, use of automated tools and its ability  to  offer
its customers solutions to both their embedded and non-embedded Year 2000
compliance requirements.  The  Company  expects  that it will continue to
receive increased revenues from additional Year 2000  engagements  during
the  next two years. However, these engagements and related revenues  are
expected  to  peak prior to calendar year 2000 as customers address their
needs. Thereafter,  the  Company  expects that revenues derived from year
2000 engagements will steadily decline.  The Company believes that
current  Year  2000  related  business  will  be  replaced  with  similar
conversion  business (e.g. Euro conversion beginning  in  1999) and legacy
modernization projects including "middleware" integration and client-server
conversions.

INFORMATION TECHNOLOGY SERVICES--INDUSTRY OVERVIEW

     FEDERAL GOVERNMENT

     The  U.S.  government is the largest single buyer of IT services  in
the world, with an  estimated  IT  services market of $29 billion in 1997
with a growth rate of 1% in 1998 and 3% in 1999.

     STATE AND LOCAL GOVERNMENT

     Industry sources estimate the state and local government IT services
market to be $13 billion in 1997 with an expected annual growth rate of
20% in each of the next five years. Of the $13 billion, professional services is
estimated at $5.3 billion with a CAGR  of  16%,  systems  integration  is
estimated at $2.0 billion with a CAGR of 20% and outsourcing is estimated
at $4.4 billion with a CAGR of 21%

     COMMERCIAL

     Industry  sources  estimate  the U.S. professional services segment,
including consulting, custom software  development  and  training, at $37
billion  in  1997  growing  at 16% per year, systems integration  at  $19
billion growing at 21% and outsourcing at $26 billion growing at 19%.

     YEAR 2000 COMPLIANCE SERVICES

     The Gartner Group estimates  the  worldwide  costs of correcting the
Year 2000 problem will range between $300 billion and  $600  billion with
$30 billion required by the U.S. federal government alone.

Information Technology Services--Business Strategy

     The principal strategies that the Company is pursuing to  expand its
IT services business include:

     INCREASING  PENETRATION  OF  EXISTING  CUSTOMER  BASE.   The Company
focuses  on  customer satisfaction and technical excellence. Due  to  its
long-term incumbent  position as a key systems integrator for some of the
nation's largest and most  complex  information  systems, the Company has
gained a unique and profound understanding of those  systems. The Company
believes this knowledge provides it with a substantial advantage in terms
of  cost,  technical  expertise  and  demonstrated  past  performance  in
competing for future work related to these systems. The Company  believes
that its  Year  2000  conversion  initiative  will  provide  it  with
similar competitive advantages with respect to a wide range of new customers.

     PENETRATING  NEW  MARKETS  BY  LEVERAGING  CORE  COMPETENCIES.   The
Company  seeks  out and exploits opportunities to market the expertise it
has  gained in past  IT  assignments  to  new  customers.  The  Company's
experience  in  federal  and  state  government Year 2000 conversions and
information   systems   security   has  proven   to   be a  key    factor
differentiating the Company in competitive  bidding  situations  with new
customers.  The  Company  plans  to  use  such  engagements  to establish
relationships  with  an  expanded base of customers that can be used  for
marketing the Company's expertise  in  additional  areas  such  as legacy
system  modernization  and software and database applications maintenance
and outsourcing. Also, the  methodology  and tools required to accomplish
Year 2000 compliance are directly applicable  to that required to upgrade
computer software to properly handle the upcoming  common European Currency
conversion. The market for such Euro currency upgrades may exceed the
Euoropean Year 2000 market in total cost.

     ESTABLISHING MARKETING ALLIANCES TO OFFER COMPLETE  SOLUTIONS.   The
Company  has  established,  and needs to continue to establish, marketing
alliances with a number of software  product  and  tool  providers  which
allow  the  Company  to offer turn-key solutions for such applications as
automated  scheduling  of   manufacturing   processes   and   large-scale
electronic document management.

     ACQUIRING STRATEGIC IT SERVICES BUSINESSES.  The Company intends  to
pursue acquisitions that will expand the Company's commercial IT services
customer  base  and  provide  specialized  capabilities  that enhance the
Company's penetration of the commercial IT services market.

Information Technology Services--Contracts and Programs

     Certain of the Company's significant IT contracts and  programs  are
described   below.  Total  contract  values  include  both  realized  and
unrealized revenues.  These  contracts  are typically funded annually and
there are no assurances that funding will  continue  beyond  the  current
fiscal  year  or, if they are funded beyond the current fiscal year,  for
how many additional years.

     U.S. GOVERNMENT--DOD

     RANGE SYSTEMS  MANAGEMENT.   In  1993,  the  Company was awarded the
Range Instrumentation Development ("RID") contract, pursuant to which the
Company supports a wide variety of aircraft range system  activities  for
the  Naval  Air warfare Center (NAWC) located at China Lake, California ,
including software  development,  test and evaluation, system integration
and fabrication of electronic threat  simulators.  The  RID contract is a
cost-plus-award-fee contract (with an average award fee score  in  excess
of 90%), has a total value of $88 million and is scheduled for completion
in October 1998.

     AVIONICS  SYSTEMS  INTEGRATION.   The  Company  participates  in the
design,  development,  fabrication,  modification and testing of hardware
for  the  NAWC,  performing a wide range  of  support  activities.  These
activities  include   systems  engineering,  systems  analysis,  software
development,  configuration   management,  verification  and  validation,
maintenance and operation services  for  various  naval  aircraft and the
development  and  maintenance  of  large-scale  hybrid simulators  (which
integrate  computer  simulations  with  actual  aircraft  avionics).  The
Company has performed this work since its first NAWC contract, awarded in
1985. In 1995, this contract was recompeted under  a program reserved for
small  businesses  and  the  Company  successfully teamed  with  a  small
business contractor, which was awarded  the  prime  contract. The current
NAWC contract is a cost-plus-award-fee contract (with  an  average  award
fee  score  in  excess  of  90%), has a total value of $33 million and is
scheduled for completion in March 2000.

     NETWORK MANAGEMENT.  In  1993,  the  Air  Force's Electronic Systems
Center  at Hanscom Air Force Base in Bedford, Massachusetts  awarded  CTA
the Technical  Engineering and Management Support IV ("TEMS IV") contract
pursuant  to  which   the  Company  provides  technical  engineering  and
management support to various  DOD command and control system procurement
programs, including the Integrated Tactical Warning and Attack Assessment
System, during all phases of the  procurement cycle. The TEMS IV contract
is a time-and-materials contract, has a total value of $54 million and is
scheduled for completion in June 1998.

     INFORMATION SYSTEMS SECURITY.   The  Company,  as a subcontractor to
SAIC, is a member of the team awarded the Center for  Information Systems
Security  contract  in  1995  by the Defense Information Systems  Agency.
Under this five-year omnibus security  engineering  contract, the Company
will  continue  to  provide  technical  support  to  information  systems
security activities within the DOD and other U.S. government  departments
and  agencies.  Activities  under  this  contract  include designing  and
implementing  the measures necessary to detect, document  and  counter  a
wide range of threats  to on-line and stored information. The Information
Systems Security contract  is  a time-and-materials contract, has a total
value of $8 million and is scheduled  for  completion  in  July  2000. In
addition,  the Company's clients for information system security services
include the  Department  of  Treasury,  General  Services Administration,
Defense  Finance  and  Accounting Service as well as  several  commercial
companies.

     DEFENSE  ENTERPRISE   INTEGRATION  SERVICES.  In  1995,  CTA  won  a
subcontract  from Unisys to provide  a  variety  of  services,  including
business process re-engineering, systems development and installation and
support for the  Defense Information System Agency of the DOD. Under this
program, called the  Defense  Enterprise  Integration  Services  ("DEIS")
program, CTA is currently performing engineering and integration services
to  implement  the  Cheyenne  Mountain  Training  and  Simulation System,
assisting   the  Space  and  Warning  Systems  Center  in  the  planning,
scheduling, conduct  and  reporting  of  software  testing  and providing
support   to   Air   Force   Space  Command  for  the  Command,  Control,
Communications and Computer Upgrade  program.  The  DEIS  contract  is  a
time-and-materials  contract,  has  a  total  value of $16 million and is
scheduled for completion in November 2000. In 1996,  CTA  won a follow-on
DEIS contract as a subcontractor to Computer Sciences Corporation  (CSC).
This contract is also a time-and-materials contract and is scheduled  for
completion in August 2001.

     MEDICAL  INFORMATION  SYSTEMS.  The  Company  is  providing  medical
information  systems  expertise  to  the DOD Department of Health Affairs
Consolidated  Health  Care  System.  This   second   generation   medical
information  system implements the most advanced technology available  in
the  industry  today.  Its  goal  is  a  paperless,  globally  accessible
electronic  patient   record  system  that  provides  authorized  medical
professionals with vital  patient  medical  histories  in near real time,
regardless of where the patient data may have been collected  or  stored,
or where the patient may be physically located when medical attention  is
required.  This  technology not only enables more accurate record keeping
but also reduces the response time required to obtain medical information
from days or weeks  to  literally  seconds. This contract is a cost-plus-
fixed-fee contract, has a total value of $30 million and is scheduled for
completion in March 2001.

     U.S. GOVERNMENT--CIVILIAN AGENCIES

     FEDERAL AVIATION ADMINISTRATION.   For the FAA, the Company provides
services related to the design, development,  integration and test of the
U.S. air traffic control ("ATC") system and has  been  supporting the FAA
automation programs since 1982. Currently, the Company is  performing  on
the following programs for the FAA:

     (i)  providing  engineering support to the FAA as a subcontractor to
TRW  under the AUA Technical  Assistance  contract  in  implementing  its
programs to replace the ATC system. This contract is a time-and-materials
contract,  has  a  total  value  of  $40  million  and  is  scheduled for
completion in December 2002.

     (ii) providing  support to the FAA as a subcontractor to  TRW  under
the ASD SETA contract  for the overall architectural design and evolution
of the National Airspace  System.  This  contract is a time-and-materials
contract,  has  a  total  value  of  $17 million  and  is  scheduled  for
completion in September 2001.

     (iii)     assisting the FAA, as a  subcontractor  to  TRW  under the
Weather   Technical   Assistance   contract   in  the  areas  of  program
engineering,  hardware  and  software engineering,  program  and  project
management, system test and evaluation,  system  implementation and human
factors.  This contract is a cost-plus-fixed-fee contract,  has  a  total
value of $3 million and is scheduled for completion in March 2000.

     (iv) providing  engineering  and  management support services to the
FAA  as  a  subcontractor  to  SRC  under the  ANN  Technical  Assistance
contract. This contract is a cost-plus-award-fee  contract,  has  a total
value of $5 million and is scheduled for completion in September 2000.

     DEPARTMENT  OF JUSTICE.  In February 1994, the Department of Justice
(DOJ) awarded the  Company a contract to assist the FBI in its program to
streamline, consolidate  and  automate  its  Criminal Justice Information
System,  which  serves  over  80,000 law enforcement  users.  Under  this
seven-year contract, the Company  is assisting the FBI in virtually every
aspect of the engineering process,  from  procurement  of new information
systems  to  the  re-  engineering  of  the  processes  that this  system
supports.  The  DOJ  contract  is  a  combined fixed-price and  cost-plus
contract,  has  a  total  value  of  $40 million  and  is  scheduled  for
completion in September 2001.

     TREASURY DEPARTMENT.  Under a contract  awarded in 1995, the Company
provides  system  engineering  and  technical  analysis  support  to  the
Treasury  Department,  primarily  for  the  Internal   Revenue  Service's
computer-based  information processing system modernization  effort.  The
Company's   support    functions   include   engineering   services   and
telecommunication and security  services. In the longer term, the Company
will  be  developing  and assessing  advanced  user  interface  concepts,
technologies and prototypes  (such  as  hypertext and speech recognition)
and assessing and recommending tools and  environments  to support future
software development. This contract is a time-and-materials contract, has
a  total  value  of  $40  million  and  is  scheduled  for completion  in
June 2000.

     GENERAL SERVICES ADMINISTRATION.   The Company provides  support for
the Federal Supply Service's central offices, its eleven regional offices
and  its  various  commodity  centers  and  depots.  The Company provides
applications  software  and  database  maintenance and upgrades,  network
administration, mainframe to client-server conversions and implementation
of electronic commerce applications. The  initial  Federal Supply Service
contract  was  atime-and-materials contract, with a total  value  of  $27
million and was  completed in September 1996. The Company was awarded the
follow-on contract  to  the original Federal Supply Service contract that
was awarded to the Company  in  1992.  This contract has a total value of
$31 million and is scheduled for completion in September 2001.

     STATE GOVERNMENT AND COMMERCIAL

     YEAR 2000 CONVERSION.  The Company believes it is a leading provider
of Year 2000 compliance services to both state and local governments. The
Company currently has contracts to provide  such  services  to  22  state
governments.  Some  states include all applications under such a contract
(e.g.  Nebraska ($22 million)  and  Kansas  ($25  million)  while  others
include  only  a  portion  of the state's overall needs. In addition, the
Company is currently under contract  to  provide  both  embedded and non-
embedded Year 2000 compliance services to several commercial clients.

     IT  SYSTEMS  ENGINEERING.  In June 1996, the Company was  awarded  a
contract by USAA, a  San  Antonio,  Texas-based  provider  of  insurance,
banking  and  investment  services,  to provide technical and engineering
support  to  the  USAA  Information Technology  Division.  The  Company's
functions  include (i) project  management  support,  including  resource
forecasting  and  tracking  and  scheduling,  (ii)  systems  engineering,
including  configuration management, systems requirements management  and
test planning  and  execution,  (iii)  procurement support, including the
development of procurement strategies, evaluation  criteria  and requests
for   proposals   and   (iv)  development  of  cost  estimates  for  USAA
procurement. The USAA contract  is  a time-and-materials contract, and is
scheduled for completion in March 2000.

     EMERGING COMMERCIAL PROGRAMS. Through  strategic business agreements
with  knowledge-based  tool  vendors,  the  Company   has   developed   a
generalized  system  transformation  practice  that  enables  it  to cost
effectively  perform  a  wide  range  of  information  system upgrades to
include  Year  2000 conversions, Euro-currency implementation,  telephone
area code expansion, replatforming of existing applications and migrating
from mainframe to  client-server architectures. The Company believes that
the knowledge and experience  it  applies  to  help clients meet the Year
2000  challenge  positions  the  Company  to meet the  broader  long-term
information system needs of its clients.

INFORMATION TECHNOLOGY SERVICES--COMPETITION

     The IT services industry in which the  Company  operates  is  highly
fragmented  with  no  single  company  or  small  group of companies in a
dominant position. The Company's competitors include  large,  diversified
firms with substantially greater financial resources and larger technical
staffs than the Company, such as BDM, Cap Gemini, CSC, EDS, IBM, Lockheed
Martin,  PRC,  SAIC,  as  well  as  firms  that receive preferences under
government programs for small businesses. The firms that compete with the
Company include consulting firms, computer services  firms,  applications
software companies and accounting firms, as well as the computer  service
arms of computer manufacturing companies and defense and aerospace firms.
In  addition,  the  internal  staffs  of client organizations, non-profit
federal  contract  research  centers  and universities  are,  in  effect,
competitors of the Company.

     The primary competitive factors in the information services industry
include technical, management and marketing competence, as well as price.
The  Company competes for commercial work  by  identification  of  unique
market  niches  in  which  the Company believes it has superior technical
service capability.

U.S. Government Contracting

      TYPES OF CONTRACTS.  The  Company's services are provided primarily
through  three  types of contracts:  fixed-price,  time-and-material  and
cost-reimbursable contracts. Fixed-price contracts require the Company to
perform  services   under   the   contract   at   a   stipulated   price.
Time-and-material contracts reimburse the Company for the number of labor
hours expended at established hourly rates negotiated in the contract and
the cost of materials incurred. Cost-reimbursable contracts reimburse the
Company for all actual costs incurred in performing the contract, to  the
extent that such costs are within a specified maximum and allowable under
the terms of the contract, plus a fee or profit.

     The  following  table shows the approximate percentage of revenue by
contract type recognized  by  the  Company's continuing operations during
the indicated periods:


<TABLE>
<CAPTION>

                           YEAR ENDED DECEMBER 31,
<S>                      <C>            <C>          <C>
TYPE OF CONTRACT
                          1995           1996         1997

  Fixed-price               8%            11%          14%
  Time-and-materials       52%            53%          54%
  Cost-reimbursable        40%            36%          31%

                          100%           100%         100%
   Total
</TABLE>


      GOVERNMENT CONTRACT REQUIREMENTS.   Many of the government programs
in which the Company participates as a contractor  or  subcontractor  may
extend  for  several  years,  but  they  are normally funded on an annual
basis.  The  Company's  U.S. government contracts  and  subcontracts  are
subject to modification,  curtailment  and  termination  in  the event of
changes   in  government  funding.  Accordingly,  all  of  the  Company's
contracts  and   subcontracts   involving  the  U.S.  government  may  be
terminated at any time by the U.S.  government,  without  cause,  for the
convenience  of  the  U.S.  government.  If a U.S. government contract is
terminated  for convenience, the Company would  be  entitled  to  receive
compensation  for  the services provided or costs incurred at the time of
termination and a negotiated  amount  of  the  profit on the contract.

     Among  the  factors  that  could  materially  adversely  affect  the
Company's U.S. government contracting business are budgetary constraints,
changes in fiscal policies or available funding, reduction  of defense or
aerospace  spending, changes in U.S. government programs or requirements,
curtailment  of  the  U.S. government's use of technology services firms,
the adoption of new laws  or  regulations, technological developments and
general economic conditions. In  addition, increased competition and U.S.
government budget constraints in the  defense  area,  and  in  areas  not
related to defense, may limit future growth in Company revenues from U.S.
government agencies and contractors.

     The  Company's  costs  and  revenues  under government contracts are
subject to adjustment as a result of annual  audits performed by the DCAA
on  behalf  of  the  DOD. Audits of the Company by  the  DCAA  and  other
agencies have been completed  for all years through 1992 without material
adjustment.

Backlog

     The  Company's  total backlog  was  approximately  $284  million  at
December 31, 1997. The  Company's  backlog is comprised of the unrealized
portions   of   the   Company's   U.S.   government    contracts,    U.S.
government-related   contracts  and  commercial  contracts.  Backlog  for
government and government-related  contracts consists of either funded or
unfunded  backlog.  Funded backlog consists  of  the  dollar  portion  of
contracts that is currently  appropriated  by  the  government  client or
other  clients and allocated to the contract by the purchasing government
agency or  otherwise authorized for payment by the client upon completion
of a specified  portion  of  work. Unfunded backlog consists of the total
unrealized award value of the  contract less the contract value funded by
the  customer, and includes multi-year  incrementally  funded  contracts,
delivery   orders,  and  task  orders  which  remain  at  the  customers'
discretion to  fund.  Unfunded government backlog comprised approximately
81% of total backlog at  December  31, 1997. Commercial and other backlog
comprised approximately 33% of total backlog at December 31, 1997.

     No individual contract or program  represents more than 10% of total
backlog at December 31, 1997. The Company  expects that approximately 31%
of the Company's total backlog as of December  31,  1997  will  result in
revenues in the year ending December 31, 1998.

     Although  unfunded backlog can include up to the stated award  value
of the contract  including  renewals  or extensions that have been priced
but still remain at the discretion of the  customer  whether to fund, the
Company,  to be conservative, often recognizes only a portion  of  stated
award values  on  multi-year  contracts into its backlog records. Because
many of the Company's contracts  are  multi-year contracts, total backlog
may  include  revenues expected to be realized  several  years  into  the
future. The unfunded  backlog  may not be an indicator of future contract
revenues or earnings because there  is  no  assurance  that  the unfunded
portion of the Company's backlog will be funded. In addition, many of the
contracts  included  in  backlog  are  subject  to  termination  for  the
convenience of the government customer.

Item 2. Properties

     The Company leases its corporate headquarters in Rockville, Maryland
under  a lease expiring in 1999. The Company currently owns a 6.75% fixed
ownership   interest   in   the   partnership  that  owns  the  corporate
headquarters building. In addition,  the  Company  has  principal  leased
facilities in Ridgecrest, California and Colorado Springs, Colorado.  The
Company  believes  that  these  properties  are  adequate  to  serve  the
Company's  present business operations, however, the Company is currently
exploring other  options  with respect to its corporate headquarters. The
Company believes that if it were unable to renew the leases on any of its
facilities, other suitable  facilities  would  be  available  to meet the
Company's needs.

Item 3. Legal

     On  October  10,  1996,  Thomas  van  der  Heyden ("Plaintiff"),  an
employee of the Company, filed suit against the Company  in  the  Circuit
Court  of  Maryland  for  Montgomery  County. In his complaint, Plaintiff
alleged   breach  of  contract,  breach  of  fiduciary   duty,   tortious
interference  with  contractual  and  business  relationships, fraud, and
breach of duty of good faith and fair dealing, all  in  connection with a
Profit Sharing Agreement dated July 6, 1993 ("Profit Sharing  Agreement")
between  van  der  Heyden  and   the Company. Specifically, the complaint
alleged that the Company failed and  refused to make payments purportedly
due and owing to him under the Profit  Sharing  Agreement with respect to
the Indostar contract, failed to reimburse him for  expenses  relating to
his  employment, and made certain misrepresentations to him which  caused
him to  modify  his  then-existing  profit  sharing  arrangement with the
Company to his detriment and interfered with his ability  to  develop new
business.  The  Profit  Sharing  Agreement provides for the Plaintiff  to
receive 25% of the profit (as defined  therein)  on  a  certain  contract
pursuant  to which CTASS provided products and services to a customer  in
Indonesia. The Company has denied all of the allegations.

     On October  18,  1996, the Company obtained a stay of the proceeding
on  the grounds that the  Profit  Sharing  Agreement  provides  that  all
disputes  regarding  the  Profit  Sharing  Agreement are to be decided by
binding arbitration. The matter has been submitted  to  arbitration which
is  expected to be completed by mid-1998. The Company believes  that  the
outcome  of  this  matter  will not have a material adverse effect on the
financial condition or future results of operations of the Company.

     The Company is currently involved in certain other legal proceedings
incidental to the ordinary course  of  its business. The Company does not
believe that any liabilities relating to  the  legal proceedings to which
it  is  a  party  are  likely to be, individually or  in  the  aggregate,
material to its consolidated financial position or results of operations.

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

     None

<PAGE>
                              PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters

     There is no established  public  trading market for the stock of the
Company  or its subsidiaries.  However,  the  Company  has  maintained  a
limited market ("Limited Market") as described below to provide liquidity
for its Common Stock.

The Limited Market

     Since  its  inception, the Company has pursued a policy of remaining
essentially employee  owned and, therefore, there has never been a public
market for the Common Stock.   Prior  to  September 1992, the Company has
offered  to  repurchase  shares from shareholders  on  several  occasions
primarily for contribution to the Company's Employee Stock Ownership Plan
("ESOP").  In order to provide  liquidity  for its shareholders, however,
the  Company  established  a  Limited Market through  an  agreement  with
Capitol Securities Management, Inc. ("Capitol") whereby Capitol maintains
the  Limited  Market. From September  1992  through  December  1997,  the
Company has conducted  five  trades  in  the  Limited Market, one each in
1992, 1993 and 1995 and two in 1994. There were  no  trades  conducted in
1996 or 1997.

     It  is  anticipated that the Limited Market will continue to  permit
existing shareholders  to  sell  shares  of  Common Stock on at least one
predetermined date each year (the "Trade Date").  Such sales will be made
at the prevailing Formula Price, or such other price as determined by the
Board  of  Directors  with  the  advice  of  the  Company's   independent
appraiser,  to  employees,  consultants and directors of the Company  who
have  been  approved  by the Board  of  Directors  or  the  Stock  Option
Committee of the Board  of Directors, pursuant to the 1991 Plan, as being
entitled to purchase up to  a specified number of shares of Common Stock.
In  addition, the Company will  be  authorized,  but  not  obligated,  to
purchase  shares  of  Common  Stock  in the Limited Market to satisfy its
requirements (including for sale to the  trustees of the Company's ESOP),
but only if and to the extent that the number  of shares offered for sale
by shareholders exceeds the number of shares sought  to  be  purchased by
authorized buyers.

     In the event that the aggregate number of shares offered for sale by
the sellers is greater than the aggregate number of shares sought  to  be
purchased  by  authorized  buyers and the Company, offers to sell will be
treated in the following manner:  Offers  to sell 1,000 shares or less of
Common Stock or up to the first 1,000 shares if more than 1,000 shares of
Common Stock are offered by any seller will be accepted first.  Offers to
sell shares in excess of 1,000 shares of Common Stock will be accepted on
a  pro-rata  basis  based  on  the  number  of  shares   owned  by  those
shareholders wanting to sell shares.  If, however, there are insufficient
purchase  orders  to  support the primary allocation of 1,000  shares  of
Common  Stock or less per  seller,  then  the  purchase  orders  will  be
allocated  equally  among  all  of  the  proposed sellers up to the total
number  of  shares  offered for sale.  Subject  to  applicable  legal  or
contractual restrictions  and  the  availability  of  funds,  the Company
currently  intends  to  purchase sufficient shares on each Trade Date  so
that each shareholder wishing  to  sell  shares  will  be able to sell at
least  1,000  shares.  Such restrictions include those contained  in  the
Colorado Corporation  Code which limit repurchases of Common Stock to the
Company's available surplus  and  restrictions in contracts, currently in
existence or which may be entered into,  such  as  the  Company's  credit
agreement,  which might restrict the Company's ability to buy back Common
Stock in the future under certain circumstances.

     To the extent  that  the  aggregate  number  of  shares sought to be
purchased exceeds the aggregate number of shares offered  for  sale,  the
Company may, but is not obligated to, sell authorized but unissued shares
of  Common  Stock  in  the  Limited  Market.   All sellers in the Limited
Market, other than the Company, pay Capitol a commission  generally equal
to 1.5 percent of the proceeds from such sales.  No commission is paid by
purchasers in the Limited Market.

     Prior  to  each  Trade  Date, Capitol will receive sell orders  from
shareholders and buy orders from  authorized  purchasers and the Company.
On  each  Trade  Date,  Capitol  will match sellers  and  buyers  of  the
Company's Common Stock (including, to the extent applicable, the Company)
according  to the proration rules described  above.   Capitol  will  then
forward payments  to  sellers,  minus  the  commission, and will issue in
book-entry form, the shares of Common Stock to  the  purchasers.  Capitol
will not buy or sell shares of Common Stock for its own account or  as an
agent for the Company.

     While  the  Company  established  the  Limited  Market to attempt to
provide liquidity to shareholders, there can be no assurance  that  there
will  be  sufficient  liquidity  to  permit  shareholders to resell their
shares in the Limited Market.

     All  persons  who purchase shares of Common  Stock  in  the  Limited
Market will be required  to  enter into Stock Restriction Agreements with
the Company.  Such agreements  provide  that,  if  the  purchaser  is  an
employee,  consultant  or  director  of the Company, upon the purchaser's
termination of employment or affiliation  with  the  Company, the Company
will have the right to repurchase all of the shares purchased pursuant to
that agreement which such person owns of record or beneficially  owns  at
the  time  of such termination, generally at the prevailing Formula Price
at the time  of  such  termination; provided, however, that to the extent
such Formula Price is less  than the price paid by such purchaser for any
of his shares, the Company will  not  repurchase  such shares without the
shareholder's consent.  Such repurchase, if elected  by the Company, will
be  effected  within  one  year  following  such termination.  The  Stock
Restriction Agreements also afford the Company  a  right of first refusal
with respect to the shares of Common Stock in the event  that  the holder
desires  to sell or transfer his or her shares other than in the  Limited
Market.

The Formula

     The purchase price of the shares of Common Stock, other than certain
shares issuable  upon  exercise of previously granted options, will be at
the formula price described  below  (the  "Formula  Price").  The Formula
Price  is  established by the Board of Directors of the Company based  on
the performance  of  the  Company  as  measured by certain factors listed
below  as  well  as certain other factors also  listed  below  which  are
determined based on  the recommendation of an independent appraiser.  The
Formula Price will be  redetermined  at  least  annually.   The  price is
determined according to the following formula (the "Formula"): the  price
per  share is equal to the product of (i) a number representing one minus
the discount  for  the  limited  liquidity  of the stock ("D") and (ii) a
fraction, the denominator of which is the number  of  outstanding  shares
and share equivalents ("Wi") and the numerator of which is the sum of (A)
the  book value of the Company at the end of the applicable period ("BV")
and (B)  a number which is the product of (a) 5.08 ("K") and (b) a number
equal to the  product  of  (I)  a  market  index  ("MI") based on certain
comparable companies, (II) the after tax profits from  operations for the
last 12 month period ("P") and (III) a fraction, the denominator of which
is 2 and the numerator of which is the sum of (A) the change  in contract
margin  ("CM"),  which  is a number equal to the contract margin for  the
last 12 months divided by  the  contract  margin  for  the prior 12 month
period,  where  contract  margin  is the contract fee as a percentage  of
contract cost adjusted for program  reserves  and  allowances and (B) the
change in revenue growth ("R"), which is a number equal  to  a  fraction,
the  numerator  of  which  is  revenue  for  the  last  12 months and the
denominator of which is the revenue for the prior 12 month  period  times
the  change  in  the  consumer  price index for that period.  The Formula
Price of the Common Stock expressed as an equation, is as follows:

                                                    (CM+R)
                                    BV+K  (MI)  (P)  -----
                                                       2
     Formula Price D equals  ------------------------------
                                            Wi

     The "discount factor" is a number  which  is intended to reflect the
discount for the limited liquidity of the Common  Stock  and  the "market
index"  is  a  number  which  is  intended to reflect existing securities
market conditions.  Both of these factors are established annually by the
Board  of  Directors  based  upon the recommendation  of  an  independent
appraisal  firm.  The 5.08 multiplier  is  a  constant  representing  the
factor necessary  to  equalize  the initial stock price calculated by the
Formula to the appraised price for  the  Common  Stock  on  the  date the
Formula  was adopted.  The remainder of the factors will be based on  the
Company's historical financial data.


Procedures for Determining Share Price

     The Formula  Price  is used to determine the Offering Price at which
the Common Stock will be sold  and will trade in the Limited Market.  The
Formula was adopted by the Board  of Directors on November 15, 1991, with
the  advice  of  the  Company's  independent  appraiser.   The  Board  of
Directors believes the Formula will result in a fair market value for the
Common Stock within a broad range of financial criteria.

     Annually,  the Company provides  audited  financial  statements  and
other data as requested  by  the  independent appraiser.  The independent
appraiser analyzes that data and recommends  two  factors of the Formula:
the  market index ("MI") and the discount factor ("D").   Based  on  this
recommendation,  the Board of Directors will determine the Formula Price.
An independent appraisal  is  used  by the Board of Directors to validate
that  the Formula has resulted in a price  which  fairly  and  reasonably
reflects the fair market value of the Common Stock.

     In  those  circumstances  when the formula does not result in a fair
market value for the Common Stock,  the  Company  establishes a price for
the Common Stock based solely on an independent appraisal.  The  price of
$5.05  per  share  at  June  30,  1997 and at December 31, 1997 was based
solely on an independent appraisal  as were all share prices prior to the
adoption of the Formula. Such appraisal  was  required on an annual basis
for purposes of valuing the assets contained in  the  Company's  ESOP and
for  determining  the  price  at which the ESOP could purchase shares  of
Common Stock.

Price Range of Common Stock

     The following table sets forth  the  price  per  share (after giving
effect  for  all  years  presented  for a 2 for 1 split of the  Company's
common stock in February 1998) at which the Common Stock was appraised by
the Company's independent appraiser,  Legg  Mason  Wood Walker, Inc., for
the last ten years.  The 1992, 1993, both 1994 and 1995  appraisal prices
were also the prices at which shares were sold in the  Limited Market for
each of the following periods ending on the dates set forth below.

<TABLE>
<CAPTION>


          EFFECTIVE DATE OF APPRAISAL PRICE PER SHARE
             <S>                               <C>
             December 31, 1997                 $5.050
             June     30, 1997                 $5.050
             December 31, 1995                 $4.745
             December 31, 1994                 $4.695
             June     30, 1994                 $4.485
             December 31, 1993                 $4.364
             December 31, 1992                 $3.583
             December 31, 1991                 $3.002
             December 31, 1990                 $2.088
             December 31, 1989                 $2.050
             December 31, 1988                 $2.015
             December 31, 1987                 $1.400
             December 31, 1986                 $0.888
</TABLE>

Report of Independent Appraiser

     Legg  Mason  Wood  Walker, Inc. ("Legg Mason") was engaged  by   the
Company to act as an independent  appraiser  for the Company.  Legg Mason
was  selected  because it is a nationally recognized  investment  banking
firm that has extensive  experience in the valuation of securities of all
types, including closely-held and seldom traded securities.

     In connection with the  Board's  determination of the Formula Price,
Legg  Mason was asked to recommend to the  Board  of  Directors  (i)  the
discount  factor  ("D") to reflect the limited liquidity of the Company's
Common  Stock and (ii)  the  market  index  ("MI")  to  reflect  existing
securities  market  conditions  and  provide to the Board of Directors an
assessment as to whether the Formula Price  calculated was within a range
which Legg Mason considered reasonable.


Division of Market Regulation

     The Company has had discussions with the  staff  of  the Division of
Market  Regulation  concerning  the  operation  of the Limited Market  in
compliance  with  the  Securities  Exchange  Act  of  1934.    While  the
Commission  has  not  formally  indicated  to  the  Company  any specific
concerns regarding the operation of the Limited Market, they may do so in
the  future.  If the Commission should raise specific concerns  with  the
Company  in the future, the Company will take requisite action to address
the Commission's concerns.

Holders of Common Stock

     As of  February  28,  1998,  there  were  approximately  290  common
stockholders of the Company.

Dividends

     It  is  the current policy of the Company to retain all earnings  to
provide funds  for  the  Company's  growth. Therefore, the Company has no
current intention of paying cash dividends  on  the  Common  Stock.   The
Company  has  not  made any distributions to its shareholders since 1988.
The Company's bank credit  agreement  also  prohibits the payment of cash
dividends.

Item 6. Selected Financial Data

     The following selected consolidated financial  data  for each of the
years  in  the  five  year  period  ended  December  31,  1997 and as  of
December 31, 1993, 1994, 1995, 1996 and 1997 have been derived  from  the
consolidated  financial  statements  of  the  Company.  The  consolidated
financial  statements for the five years ended December 31, 1993  through
1997 have been  audited  by  Ernst & Young LLP, independent auditors. The
data  (in  thousands, except for  per  share  data)  should  be  read  in
conjunction  with  the  consolidated financial statements, related notes,
and other financial information included elsewhere in this document.
<PAGE>


<TABLE>
<CAPTION>

Income Statement
  Data
                       1993       1994         1995       1996       1997

<S>                   <C>        <C>         <C>         <C>        <C>
  Contract revenues   $92,072    $107,471    $105,224    $96,246    $92,239
  Cost of contract
   revenues            77,394      90,102      96,633     87,644     80,503
  Selling, general
   and
   administrative
   expenses             5,277       6,723       4,117      5,431      7,649
  Other expenses        1,492         833        (292)     2,447      3,668
                        -----       -----       -----      -----      -----

  Operating profit      7,909       9,813       4,766        724        419
  Interest expense        248         907         850        969      1,589
                        -----       -----       -----      -----      -----

  Income (loss) before
  income taxes          7,661       8,906       3,916       (245)    (1,170)

  Provision (benefit) for
  income taxes          3,370       3,830       1,567        (80)      (500)
                        -----       -----       -----        ---        ---

  Income (loss) from
  continuing operations 4,291       5,076       2,349       (165)      (670)

  Income (loss) from
  discontinued
  operations, net of
  income taxes(1)(2)      259        (617)       (403)   (10,872)       648
                        -----       -----       -----     ------       ----

  Net income (loss)    $4,550      $4,459      $1,946   $(11,037)      $(22)


  Basic earnings (loss)
  per share:
   Continuing
     operations         $0.48       $0.53       $0.27     $(0.02)    $(0.07)

   Discontinued
     operations          0.03       (0.06)      (0.05)     (1.22)      0.07
                         ----       -----       -----      -----      -----

  Earnings (loss)
   per share            $0.51       $0.47       $0.22     $(1.24)     $0.00

  Diluted earnings (loss)
  per share:
   Continuing
    operations          $0.46       $0.50       $0.25     $(0.02)    $(0.07)

   Discontinued
    operations           0.03       (0.06)      (0.04)     (1.22)      0.07
                        -----       -----       -----      -----      -----

  Earnings (loss) per
  share-diluted         $0.49       $0.44       $0.21     $(1.24)     $0.00

  Weighted average number
   of shares
   outstanding          8,853       9,567       8,863      8,875      9,092

  Diluted average number
   of shares
   outstanding          9,378      10,092       9,418      8,875      9,092
</TABLE>


<TABLE>
<CAPTION>
                                          DECEMBER 31,
                                          ------------

  Balance Sheet Data:    1993       1994      1995      1996      1997
                       -------    -------   -------   -------   -------

<S>                    <C>        <C>       <C>       <C>       <C>
  Cash and cash
  equivalents.......   $ 1,390    $ 3,902   $   235   $    16   $   -
  Working capital...    24,987     20,638    19,713    13,721    12,588
  Total assets......    74,346     89,816    91,530    92,690    45,288
  Short-term debt...     5,524     15,750    17,074    28,335     9,112
  Long-term debt....    20,418     17,765    17,431    18,510     3,333
  Total stockholders'
  equity...........     24,417     27,950    28,773    17,793    15,810
</TABLE>

(1)  During  1997, the Company  sold  its  Space  and  Telecommunications
Systems and its Mobile Information and Communications Services businesses
to  Orbital  Sciences  Corporation.   Results  of  operations  have  been
restated to exclude revenues and expenses of discontinued operations from
captions  applicable   to  continuing  operations.  See  Note  2  to  the
Consolidated Financial Statements.

(2)   During  1995,  the  Company  discontinued  the  operations  of  its
Simulation  Systems  Division,   which   manufactured   aircraft   flight
simulators  for  sale  or  lease,  and  sold  its  assets  to  a  company
principally owned by one of the Company's principal stockholders. Results
of  operations  have been restated for the sale of the Simulation Systems
Division. See "Certain  Transactions"  and  Note  2  to  the Consolidated
Financial Statements.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Forward Looking Statements

     This filing may contain "forward-looking" statements, as that term
is defined in the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements concerning
expectations of the Company's future performance in terms of revenue and
earnings.  There can be no assurance that actual results will not differ
materially from those projected or suggested in such forward-looking
statements.  Factors which could cause a material difference in results
include, but are not limited to, the following: regional and national
economic conditions; changes in interest rates; changes in government
spending policies and/or decisions concerning specific programs; individual
business decisions of customers and clients; developments in technology;
competitive factors and pricing pressures; changes in government laws
and regulations; acts of God; and the Company's ability to achieve the
objectives of its business plans.


     The following discussion and analysis should be read  in conjunction
with  the  consolidated  financial statements and notes thereto  included
elsewhere in this document.

Results of Operations

     The following tables  set  forth  certain  items  in  the  Company's
Statements of Operations as a percentage of contract revenues:
<PAGE>

<TABLE>
<CAPTION>

                                             YEAR ENDED DECEMBER 31,
                                             -----------------------
                                      1995             1996            1997
                                     -----            -----           -----
<S>                                  <C>              <C>             <C>
  Contract revenues                  100.0%           100.0%          100.0%
  Cost of contract revenues           91.8             91.1            87.3
  Selling, general and
   administrative expenses             3.9              5.6             8.3
  Supplemental ESOP contribution       0.0              0.0             3.2
  Other expenses                      (0.3)             2.5             0.8
                                     -----            -----           -----

  Operating profit                     4.5              0.8             0.4
  Interest expense                     0.8              1.0             1.7
                                      ----             ----            ----

  Income (loss) before income taxes    3.7             (0.2)           (1.3)
  Provision (benefit) for
   income taxes                        1.5             (0.0)           (0.6)
                                      ----             ----            ----

  Income (loss) from continuing
   operations                          2.2             (0.2)           (0.7)
  Income (loss) from discontinued
    operations, net of income taxes   (0.4)           (11.3)            0.7
                                      ----            -----            ----

  Net income (loss)                    1.8%           (11.5)%          (0.0)%


</TABLE>

     The  following  tables  set  forth  certain  items  in the Company's
Statements of Operations by operating segment:

<TABLE>
<CAPTION>
                                         Year  ended December 31,
                                         ------------------------
                                        1995       1996       1997
(In thousands of dollars)
  Contract revenues:
<S>                                   <C>         <C>        <C>
   Federal                            $105,224    $91,953    $73,464
   Commercial                            -          4,293     18,775
                                      --------    -------    -------
                                      $105,224    $96,246    $92,239


  Operating profit (loss):
   Federal                              $4,474     $2,442     $2,933
   Commercial                              -          729      1,154
  Other expenses                           292     (2,447)    (3,668)
                                        ------     ------     ------
                                        $4,766     $  724     $  419


</TABLE>

1997 Compared with 1996

     CONTRACT REVENUES. Contract revenues decreased 4.2% to $92.2 million
in 1997 from $96.2 million in 1996. Contract revenues from  the Company's
Year  2000  Century  Date Change conversion contracts increased  467%  to
$15.8 million in 1997  from   $3.4 million in 1996. The Company performed
such services in 1997 for the States of Nebraska, Kansas, Iowa and others
as well as Cessna Aircraft and Virginia Tech.

     A new contract in 1997, providing program management and integration
for the Assistant Secretary of  Defense  for  Health  Affairs,  generated
revenues  of  $7.1  million.  Another new program, the Defense Enterprise
Integration Services (DEIS) subcontract  to Computer Sciences Corporation
(CSC) generated revenues of $4.1 million in  1997.  Contract  revenues on
the Company's contact with the General Services Administration's  Federal
Supply  Service  increased 65% from $6.5 million in 1996 to $10.8 million
in 1997.

     These increases in contract revenues were offset by decreases on the
Technical Engineering  and  Management  Support  IV  (TEMS IV) program at
Hanscom Air Force Base of $10.4 million in 1997 compared  to  1996 as the
program  winds  down.  Revenues  on  the  Naval Air Weapons Center (NAWC)
contract at China Lake, California decreased  in  1997  by  $5.2  million
compared to 1996. In the first quarter of 1996, the Company completed its
five-year  contract  with the NAWC, the last of the Company's significant
contracts awarded during  its  period  of  eligibility for small business
awards which ended in 1992. Although it was  ineligible to rebid for this
contract as the prime contractor, the Company is a major subcontractor to
the small business prime contractor who was awarded  the  NAWC  follow-on
contract,  from  which  the  Company  receives  approximately  45% of the
contract revenues.

     Contract revenues on the NAWC subcontract increased by
$0.3  million  in  1997  compared  to  1996.  Contract  revenues  in 1997
decreased  by  $2.0  million  on  the  Range  Instrumentation Development
contract and by $1.3 million on the AUA technical assistance  contract.
Contracts which ended in 1997, such as the Systems Engineering Analysis
Contract for NASA  and  the GSA Eastern Zone contract, contributed to the
decline in contract revenues as did the sale of the Advanced Information
Systems Division. Contracts which  ended  in 1996,  such  as  the  Air Force
Warning System integration contract, also contributed to the overall decline
in contract revenues in 1997.

     The Company revised  its  estimates  of  the full contract value and
profitability of its Eastern Zone contract with  the  GSA, resulting in a
reduction  in  revenues  and  operating  profit in 1996 of $2.6  million,
reflecting the Company's current estimate  of  the  contract's  profit at
completion. The Eastern Zone contract incurred significant start-up costs
related to the establishment of nine new facilities required for contract
performance and to difficulties encountered in cost-effective staffing of
the  personnel  required  under  the  contract.  The  use  of subcontract
personnel to fill critical positions resulted in cost overruns.

     The Company initially expected that future contract performance over
the  full  contract term at originally anticipated staffing levels  would
result in profit  sufficient  to  offset  early  program losses. However,
revenues on the contract were not sufficient to offset  these losses. The
Company has submitted claims against the U.S. government seeking recovery
of $1.5 million of the overrun. The Company has recorded  these claims as
an unbilled receivable, against which it has certain reserves.

       COST  OF  CONTRACT REVENUES.  Cost of contract revenues  decreased
8.2% to $80.5 million,  or 87.3% of contract revenues, in 1997 from $87.6
million, or 91.1% of contract  revenues, in 1996. The decrease in cost of
contract revenues as a percentage of contract revenues resulted primarily
from  the  effect  of  changes  in  the   estimated  contract  value  and
profitability of the Eastern Zone contract in 1996. Without giving effect
to the reduction in revenues due to the Eastern  Zone  contract, the cost
of contract revenues as a percentage of contract revenues  for  1996  was
88.7%.  The decrease in cost of contract revenues in 1997 would have been
even more significant were it not for the indirect cost impact of $0.9
million related to the sale of the Space and Telecommunications business
and start-up costs of $1.0 million related to certain commercial contracts.

     SG&A. Selling, general and administrative expenses ("SG&A") for 1997
increased  40.8% to $7.6 million, or 8.3% of contract revenues, from $5.4
million, or  5.6% of contract revenues, in 1996. Higher costs and reduced
revenues accounted  for  the increase in SG&A as a percentage of contract
revenues in 1997. The increase  in  SG&A reflects the Company's continued
investment in infrastructure and in the initiatives required to implement
the  Company's marketing strategies and  increased  focus  on  commercial
markets as well as the indirect cost impact of $0.3 million related to the
sale of the Space and Telecommunications business.

     SUPPLEMENTAL  ESOP CONTRIBUTION. During 1997, the Board of Directors
elected to make a one-time  supplemental  contribution  of  approximately
$3.0  million to the Company's employee stock ownership plan (ESOP).  The
ESOP allows  employees  to share in the Company's profitability and helps
the Company attract and retain a quality workforce.

     OTHER EXPENSES.  Other  expenses  decreased  to $0.7 million in 1997
from $2.4 million in 1996. The decrease is due primarily to the write-off
in  the  fourth  quarter of 1996 of capitalized software  costs  of  $0.8
million and $0.9 million  related  to  the Company's unsuccessful initial
public offering.

     OPERATING PROFIT (LOSS). As a result  of  the foregoing, the Company
had an operating profit of $0.4 million in 1997  compared to an operating
profit of $0.7 million in 1996.

     INTEREST EXPENSE.  Interest expense increased  to  $1.6  million  in
1997  from $1.0 million in 1996 due to the payment of additional interest
on the  subordinated  debt  as  a  result  of  the  sale of the Space and
telecommunications   Systems   business  to  Orbital.  Interest   expense
allocated to discontinued operations  was  $2.1  million in 1997 and $3.3
million in 1996.

     INCOME  (LOSS)  FROM  DISCONTINUED  OPERATIONS.  The   income   from
discontinued operations in 1997 was $0.6 million, net of tax benefits  of
$1.4  million,  compared  to a loss from discontinued operations of $10.9
million, net of tax benefits  of $5.6 million in 1996. The income in 1997
includes  a  gain  on  the  sale of  the  segments  to  Orbital  Sciences
Corporation of $3.9 million.  The  loss in 1996 includes charges totaling
$9.2 million related to lower profitability  on a contract and the write-
off of the investment in GEMnet.

     1996 Compared with 1995

     CONTRACT REVENUES. Contract revenues decreased 8.5% to $96.2 million
in  1996  from $105.2 million in 1995. An increase  in  revenue  of  $3.6
million on  the  RID  contract, $3.4 million on the Nebraska contract and
$1.3  million on the Maritech  contract  was  more  than  offset  by  the
decrease  of  $11.2  million on the NAWC and NAWC follow-on contracts and
$6.5  million  on the Eastern  Zone  contract.  Revenues  from  contracts
awarded in full  and open competition increased to $96.9 million or 96.9%
of contract revenues in 1996 from $89.1 million or 81.4% in 1995.

     In the first  quarter  of  1996, the Company completed its five-year
prime contract with the NAWC at China  Lake, California. This represented
the last of the Company's significant contracts awarded during its period
of  eligibility for small business awards,  which  ended  in  1992.  This
contract  represented  $20.4 million in revenues in 1995. Although it was
ineligible to rebid for  this  contract  as  the  prime  contractor,  the
Company  is  a major subcontractor to the small business prime contractor
who was awarded the NAWC follow-on contract in April 1996, from which the
Company receives approximately 45% of the contract revenues. In 1996, the
Company received revenues of $5.1 million from the original NAWC contract
and $4.1 million in revenues from the follow-on contract.

      The Company  revised  its  estimates of the full contract value and
profitability of its Eastern Zone  contract  with the GSA, resulting in a
reduction  in  revenues and operating profit in  1996  of  $2.6  million,
reflecting the Company's  current  estimate  of  the contract's profit at
completion. The Eastern Zone contract incurred significant start-up costs
related to the establishment of nine new facilities required for contract
performance and to difficulties encountered in cost-effective staffing of
the  personnel  required  under  the  contract.  The use  of  subcontract
personnel to fill critical positions resulted in cost overruns.

     The Company initially expected that future contract performance over
the  full contract term at originally anticipated staffing  levels  would
result  in  profit  sufficient  to  offset early program losses. However,
revenues on the contract were not sufficient  to offset these losses. The
Company has submitted claims against the U.S. government seeking recovery
of $1.5 million of the overrun. The Company has  recorded these claims as
an unbilled receivable, against which it has certain reserves.

       COST  OF CONTRACT REVENUES.  Cost of contract  revenues  decreased
9.3% to $87.6  million, or 91.1% of contract revenues, in 1996 from $96.6
million, or 91.8% of contract revenues, in 1995. Without giving effect to
the reduction in  revenues  due to the Eastern Zone contract, the cost of
contract revenues as a percentage  of  contract  revenues  for  1996  was
88.7%.

     SG&A. Selling, general and administrative expenses ("SG&A") for 1996
increased  31.9% to $5.4 million, or 5.6% of contract revenues, from $4.1
million, or  3.9% of contract revenues, in 1995. Higher costs and reduced
revenues accounted  for  the increase in SG&A as a percentage of contract
revenues in 1996. The increase  in  SG&A reflects the Company's continued
investment in infrastructure and in the initiatives required to implement
the  Company's marketing strategies and  increased  focus  on  commercial
markets.

     OTHER  EXPENSES.   Other  expenses increased to $2.4 million in 1996
from $(0.3) million in 1995. The  increase is due primarily to the write-
off in the fourth quarter of 1996 of  capitalized  software costs of $0.8
million  and  $0.9 million related to the Company's unsuccessful  initial
public offering.  Lower  expenses  in  1995  resulted  from a reversal of
certain amounts in reserves in 1995 set aside in 1994.

     OPERATING PROFIT (LOSS). As a result of the foregoing,  the  Company
had  an operating profit of $0.7 million in 1996 compared to an operating
profit of $4.8 million in 1995.

     INTEREST  EXPENSE.   Interest  expense  increased to $1.0 million in
1996  from  $0.8 million in 1995 due to higher average  balances  on  the
Credit Facility  due  to increased capital expenditures. Interest expense
allocated to discontinued  operations  was  $3.3 million in 1996 and $3.2
million in 1995.

     INCOME   (LOSS)  FROM  DISCONTINUED  OPERATIONS.   The   loss   from
discontinued operations in 1996 was $10.9 million, net of tax benefits of
$5.6 million, compared  to  a  loss  from discontinued operations of $0.4
million, net of tax benefits of $0.3 million  in  1995.  The loss in 1996
includes charges totaling $9.2 million related to lower profitability  on
a  contract  and  the  write-off of the investment in GEMnet. The loss in
1995 includes a loss of  $0.5 million from the disposal of the Simulation
Systems Division.

Liquidity and Capital Resources

     The  Company's  net  income   (loss)  was  ($0.02  million),  ($11.0
million), and $1.9 million in 1997, 1996 and 1995, respectively. Its cash
flow provided by (used in) operating  activities  was   $(10.2  million),
$(5.6  million),  and  $2.4 million in 1997, 1996 and 1995, respectively.
The principal factors accounting  for  the  provision  (use)  of  cash in
operating  activities  in  1997  were  $(3.9  million)  non-cash  gain on
disposal  of  segments,  $2.8  million  of  depreciation and amortization
expense,  ($3.6)  million  payment of previously  accrued  interest,  and
changes in working capital accounts  using  $5.6  million  of  cash.  The
principal factors accounting for the provision (use) of cash in operating
activities  in 1996 was the net loss of  $11.0 million and an increase in
accounts receivable  and other net assets of $6.6 million, offset by $5.6
million of depreciation  and  amortization  expense  and the $6.4 million
write-off  of the investment in GEMnet. The principal factors  accounting
for the provision  (use)  of  cash in operating activities in 1995 were a
$0.7 million loss on the disposal  of  the  Simulation  Systems Division,
$3.2  million  of  depreciation  and  amortization expense, $1.0  million
provision for receivable allowances, $1.1 million of accrued interest and
changes in working capital accounts using $4.0 million of cash.

     Cash  provided  by  (used  in) investing  activities  totaled  $14.4
million, $(6.2 million), and $(5.2  million)  in  1997,  1996  and  1995,
respectively. Proceeds from the sale of segments provided $18 million  in
1997.  Additions  to  furniture  and  equipment  were  $3.6 million, $6.5
million, and $4.3 million in 1997, 1996 and 1995, respectively.  Software
development  expenditures  were $0.1 million in 1996 and $0.8 million  in
1995.

     Cash provided by (used  in) financing activities was $(4.2 million),
$11.5 million, and $(0.9 million)  in  1997, 1996 and 1995, respectively.
Financing was primarily provided by borrowings  under the Credit Facility
and offset by the repayment of subordinated debt  and  acquisition  notes
and  the purchase of treasury stock for the employee stock purchase plan.
The Company's  net  borrowings  (payments) under the Credit Facility were
$(3.7 million), $12.0 million and  $1.3  million for 1997, 1996 and 1995,
respectively. The 1997 amount is net of $5  million  proceeds  from a new
three-year  term  loan.  In  connection with the sale of the segments  to
Orbital, $27 million in debt was assumed by the purchaser.  Net purchases
of treasury stock were $0.1 million,  $0.5  million,  and $2.0 million in
1997, 1996 and 1995, respectively.

     In  November  1997,  the  Company  entered  into  a  new  three-year
agreement  with  a  bank  for  a  credit facility providing  the availability
to borrow up to $20  million, including a revolving facility of $15 million,
which includes a facility for letters  of credit up to $4 million, and a
new $5 million term  facility.  At  December  31,  1997,  there was $7.4
million outstanding   under  the  revolving  credit  facility  and   $5
million outstanding under  the  term  facility,  to  be repaid in equal
quarterly payments.

     Borrowings under the credit facility are  secured  by  substantially
all  of  the  Company's  assets  and bear interest at either the lender's
prime rate or LIBOR plus 1.5% to 2.25%  (based  on the Company's ratio of
total  funded debt to earnings before interest, taxes,  depreciation  and
amortization)  at the Company's discretion.  The weighted average rate in
effect for short-term  borrowings  at December 31, 1997 was approximately
7.7%.  Under the agreement, the Company  pays an annual commitment fee on
the unused credit
line and an annual administration fee on the total revolving credit line.
The credit facility requires advance approval by the bank for the Company
to pay cash dividends.  The agreement also  includes  financial covenants
which  require  the  Company  to  maintain certain financial  ratios  and
restricts capital expenditures.

     In January 1998, the Company completed the $2.0 million tender offer
accrued for as of December 31, 1997.  The Company believes that cash flow
from operations and available bank borrowings will provide adequate funds
for continued operations for the next twelve months.

Other Matters

     The "Year 2000" issue concerns the  potential  exposures  related to
existing computer programs that use only two digits to identify a year in
the  date  field.  These  programs  were  designed  and developed without
considering  the  impact of the upcoming change in the  century.  If  not
corrected, many computer  applications  could  fail  or  create erroneous
results by or at the Year 2000. The Company has evaluated,  and continues
to  evaluate,  the  potential  cost  associated  with becoming Year  2000
compliant.  The  Company believes that its principal  payroll  and  human
resources related  systems,  which  are  licensed  from and maintained by
third party software development companies, are Year  2000 compliant. The
Company  is  in  the  process  of  selecting new financial systems  which
management  expects  to  be  Year  2000 compliant.  Management  does  not
anticipate that the remaining costs  associated  with  assuring  that its
internal  systems  will  be  Year  2000 compliant will be material to its
business, operations or financial condition.

Item 8. Financial Statements and Supplementary Data

     The information required by this item is included under Item 14(a)
of this document.

Item 9.  Changes in and disagreements with Accountants on Accounting and
Financial Disclosure

     None
<PAGE>
                              PART III

Item 10. Directors and Executive Officers of the Registrant

     The following table sets forth  certain  information  regarding  the
directors and executive officers of the Company as of December 31, 1997:

<TABLE>
<CAPTION>
  NAME                       AGE                POSITION
                             ---           ------------------
<S>                           <C>      <C>
  C.E. Velez                  57       President, Chief Executive Officer and
                                         Chairman of the Board
  Gregory H. Wagner           49       Executive Vice President, Chief
                                         Financial Officer and Treasurer
  Terry J. Piddington         54       President, CTA Federal Information
                                         Systems Company
  Harvey D. Kushner(1)        67       Director
  David R. Mackie (1)         59       Director
  Raymond V. McMillan (1)     64       Director
  George W. Morgenthaler(1)   70       Director
  James M. Papada, III(1)     49       Director
  Arturo Silvestrini(1)       67       Director
</TABLE>
___________

(1)  Member  of the Compensation Committee and the Audit Committee of the
     Board of Directors.
___________

     Dr. C.E.  "Tom"  Velez, a founder of the Company, has been President
and Chairman of the Board since the Company's organization in 1979. Prior
to founding the Company,  Dr.  Velez  was  employed  by  Martin  Marietta
Aerospace for three years as Director, Software Engineering Research  and
Development, and was previously employed at the NASA Goddard Space Flight
Center  for  12 years in various positions including Chief of the Systems
Development and  Analysis  Branch.  Dr.  Velez  is  also  a  director  of
Constellation and EarthWatch.

     Gregory  H.  Wagner  has  been  Executive  Vice  President and Chief
Financial Officer and Treasurer of the Company since November  1992. From
1988 to 1992, he was Vice President of Finance of the Company. Mr. Wagner
was  previously employed with Martin Marietta Aerospace for ten years  in
various positions, most recently as Director of Business Management.

     Terry  J.  Piddington  has  been  President of the Company's Federal
Information Systems Company since October  1997  and before that had been
Executive Vice President of the Company since February 1987. From 1985 to
1987,  he  was  a  Vice  President  of the Company's Systems  Engineering
Services Division.

     Harvey  D.  Kushner  has  been  a  Director  of  the  Company  since
July 1989. Mr. Kushner formed Kushner Management  Planning Corporation in
1988  which  is  a  professional  services firm advising  in  management,
business and technology development. From 1987 to 1988, he was an officer
of Atlantic Research Corporation. Prior  to  1987,  Mr.  Kushner had been
employed by the ORI Group for 33 years, having served as Chairman  of the
Board of Directors, Chief Executive Officer, and President for 20 years.

     David R. Mackie has been a Director of the Company since 1997. Since
1985 he has been an independent consultant and is currently a Partner  in
Diplomatic  Resolutions,  Inc.  Prior  to 1985, he held various positions
with Tandem Computers, where he was one  of the co-founders, and Hewlett-
Packard.

     Raymond V. McMillan has been a Director  of the Company since August
1996 and President of Information Technology Services  from April 1996 to
his  retirement in October 1997 and before that had been  Executive  Vice
President of the Company since February 1991. From 1988 to 1991, he was a
Vice President  of  the  Company.  From  1984 to 1987, he was a Brigadier
General in the Air Force responsible for management  of  the  integration
and  test  of the DOD's Integrated Tactical Warning and Attack Assessment
System.

     George  W.  Morgenthaler  has  been  a Director of the Company since
August 1991. From 1986 to the present, he has  served  on  the faculty of
the University of Colorado at Boulder as Professor, Aerospace Engineering
Sciences.  He  previously  served  four years as Department Chairman  and
Associate Dean of the College of Engineering  and  Applied  Science. From
1960 to 1986, he was with Martin Marietta; his last position  was as Vice
President of Energy, Technology and Special Products. He is on  the Board
of Directors of Dynamic Materials Corp., a NASDAQ company.

     James M. Papada, III has been a Director of the Company since August
1996.  Since prior to 1991, he has been a senior partner in the corporate
department of the law firm of Stradley, Ronon, Stevens & Young, a limited
liability  partnership  in  Philadelphia,  Pennsylvania,  specializing in
merger and acquisition transactions. He is also the Chairman of the Board
of Technitrol, Inc., a multi-national, diversified manufacturing  company
listed  on the New York Stock Exchange. He is also a Director of ParaChem
Southern,  Inc.,  a  manufacturer  of  specialty  chemical  products  and
GlassTech,  Inc.,  a manufacturer of glass tempering and bending systems.
From February 1983 until  December  1987,  Mr.  Papada  was President and
Chief Operating Officer of Hordis Brothers, Inc., a privately  held glass
fabricator.

     Arturo  Silvestrini  has  been  a  Director  of  the  Company  since
August  1991.  Since November 1991 he has been President and CEO of Earth
Observation Satellite  Corporation.  From  1965  to  1991,  he  was  with
Computer Sciences Corporation, most recently as Senior Vice President for
European operations.

     Executive  officers  are reviewed annually by the Board of Directors
and serve at the pleasure of the Board.
Item 11. Executive Compensation

     The   following  table  sets   forth   information   regarding   the
compensation  for  1997,  1996  and 1995 of the Company's Chief Executive
Officer and the four other most highly  compensated executive officers in
1997  (the  "Executive  Officer  Group") for  services  rendered  in  all
capacities to the Company:
<TABLE>
<CAPTION>
                                SUMMARY COMPENSATION TABLE

                                                        LONG-TERM
                       ANNUAL COMPENSATION             COMPENSATION
                    --------------------------  --------------------------
                                          Other   Res-
                                         Annual tricted
                                         Compen  Stock    Option    Compen
NAME AND PRINCIPAL        Salary  Bonus  sation Awards    Awards    sation
POSITION(S)         Year    ($))   ($)   ($)(1)    ($)       (#)    ($)(2)
                    ----  ------- -----  ------  -----    -------  -------
<S>                 <C>   <C>      <C>    <C>    <C>      <C>      <C>
C.E. Velez          1997  280,000     --  2,090     --       --     14,480
(1)President,       1996  276,743     --  1,870     --     59,010    5,700
Chief Executive     1995  253,454     --  1,691     --       --      6,300
Officer and
Chairman of the
Board

Ricardo de          1997  175,108     --  1,540   44,339     --     11,835
Bastos(3)           1996  134,616     --  1,441  125,000  102,684  338,960(4)
President-Space     1995     --       --    --      --       --       --
and
Telecommunications
Systems and Director

Terry J.            1997  155,000     --  1,396     --       --     14,028
Piddington-         1996  153,350     --  1,221     --     32,666    5,700
Executive Vice      1995  139,412  38,453 1,107     --       --      4,800
President

Raymond V.          1997  142,308  90,000 2,346     --       --     50,759
  McMillan          1996  182,779     --  2,815     --    178,988   12,180
President-          1995  166,385     --  2,616     --       --     16,915
Information
Technology Services (5)
Services (5)

Gregory H. Wagner   1997  167,900  85,000   927     --       --     32,461
  Executive Vice    1996  167,900     --    856     --     85,828    5,700
President, Chief    1995  150,007     --    768     --       --     27,085
Financial Officer
and Treasurer
</TABLE>

___________


(1)  Represents long term disability  premiums  and  group life insurance
premiums for amounts in excess of $50,000.

(2)  Includes  amounts  of  the  Company's  contributions  allocated   to
participants'  accounts  pursuant  to the Company's 401(k) plan and ESOP,
other relocation reimbursements and  miscellaneous cash payments pursuant
to the Company's cafeteria plan.

(3)  Mr. de Bastos joined the Company  in  April 1996 at an annual salary
of $200,000 and resigned effective August 15, 1997.

(4)  Includes  $125,000 (after tax) and relocation  expense  of  $131,003
paid in connection with hiring.

(5)  Mr. McMillan resigned in October 1997.

Option Grants During 1997

     There were  no  options  granted in fiscal 1997 to any member of the
Executive Officer Group.

Fiscal Year-End Option Values

     The following table sets forth  information  concerning the exercise
of  stock  options  during  fiscal  1997  and  the number  and  value  of
unexercised  stock  options  held  at  year  end by each  member  of  the
Executive Officer Group.

<TABLE>
<CAPTION>
                                            Number of
                                            Securities            Value of
                                            Underlying           Unexercised
                   Shares                   Unexercised         In-the-Money
                  Acquired                   Options at           Options at
                     on       Value         FY-End (#)          FY-End ($)(1)
                  Exercise  Realized        Exercisable/         Exercisable/
  NAME               (#)       ($)         UNEXERCISABLE        UNEXERCISABLE
  -----           --------  --------       -------------        -------------
<S>                 <C>        <C>         <C>                   <C>
  C.E. Velez          --        --         19,670/39,340         5,999/11,999
  Ricardo de Bastos   --        --             --                    --
  Terry J.            --        --         10,888/21,778         3,321/6,642
  Piddington
  Raymond V.          --        --         106,994/115,994       14,120/2,824
  McMillan
  Gregory H. Wagner   --        --         11,942/73,886         1,821/22,535
</TABLE>

___________



(1)  There  was  no  public  trading  market  for  the  Common  Stock  on
December 31, 1997. Accordingly, solely for purposes  of  this  table, the
values  in  this column have been calculated on the basis of an estimated
market price of $5.05 per share, less the aggregate exercise price of the
options.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     The following  table  sets  forth certain information with regard to
the beneficial ownership of the Common  Stock  as of December 31, 1997 by
(i) each person known by the Company to own beneficially  more than 5% of
the  outstanding  shares  of  Common  Stock,  (ii)  each  director,  each
executive  officer  and  each member of the Executive Officer  Group  and
(iii) all current directors  and  executive  officers of the Company as a
group:


<TABLE>
<CAPTION>
                                  Shares Beneficially    Percent Beneficially
                                       OWNED (1)              OWNED(2)
  NAME OF BENEFICIAL OWNER
<S>                                  <C>                    <C>
  5% Stockholders:
  C.E. Velez                           4,661,750 (3)          50.6%
  ESOP                                 1,615,318              17.5
  B.A. Claussen                          919,634 (4)          10.0
  Directors and executive officers:
  C.E. Velez                           4,661,750 (3)          50.6%
  Terry J. Piddington                    442,890 (5)           4.8
  Gregory H. Wagner                      135,520 (6)           1.7
  Raymond V. McMillan                    123,782 (7)           1.5
  George W. Morgenthaler                  17,454                *
  Harvey D. Kushner                       12,912 (8)            *
  James M. Papada, III                     4,446                *
  Arturo Silvestrini                       3,034                *
  David R. Mackie                            496                *
  All current directors and
  executive officers as a group
  (9 persons as of December 31,
  1997)                                5,402,284 (9)          58.6%
</TABLE>

___________

*    Less than 1%.

(1)  Except as otherwise indicated, the persons  in  this table have sole
voting and investment power with respect to all shares  of  Common  Stock
shown  as  beneficially owned by them, subject to community property laws
where  applicable  and  subject  to  the  information  contained  in  the
footnotes  to  this table. Shares not outstanding but deemed beneficially
owned by virtue  of  the right of a person or group to acquire them as of
December  31, 1997 are  treated  as  outstanding  only  for  purposes  of
determining  the number of and percent owned by such person or group. All
share amounts  are  exclusive  of  shares  beneficially owned through the
ESOP.

(2)  The  number  of  shares  of Common Stock deemed  outstanding  as  of
December  31, 1997 was 9,213,668  shares,  which  includes  non-qualified
options to purchase 462,648 shares of Common Stock granted under the 1991
Plan, which are currently exercisable as of December 31, 1997.

(3)  Includes  non-qualified  options to purchase 19,670 shares of Common
Stock granted under the 1991 Plan,  which are currently exercisable as of
December 31, 1997.

(4)  Includes non-qualified options to  purchase 200,000 shares of Common
Stock granted under the 1991 Plan which are  currently  exercisable as of
December 31, 1997.

(5)  Includes non-qualified options to purchase 10,888 shares  of  Common
Stock  granted under the 1991 Plan which are currently exercisable as  of
December 31, 1997.

(6)  Includes  non-qualified  options to purchase 11,942 shares of Common
Stock granted under the 1991 Plan  which  are currently exercisable as of
December 31, 1997.

(7)  Includes non-qualified options to purchase  106,994 shares of Common
Stock granted under the 1991 Plan which are currently  exercisable  as of
December 31, 1997.

(8)  Includes  non-qualified  options  to purchase 3,240 shares of Common
Stock granted under the 1991 Plan which  are  currently exercisable as of
December 31, 1997.

(9)  Includes non-qualified options to purchase 152,734 shares of Common
Stock granted under the 1991 Plan which are currently exercisable as of
December 31, 1997.

Item 13. Certain Relationships and Related Transactions

     During  1995,  the  Company  discontinued  the   operations  of  its
Simulation   Systems   Division,   which  manufactured  aircraft   flight
simulators  for  sale  or lease. The assets  of  the  division  consisted
primarily of a cockpit flight  simulator  and various fixed assets, which
had an aggregate value of $3.1 million, net  of accumulated depreciation.
These  assets  were sold on September 1, 1995 to  a  company  principally
owned by Mr. Claussen,  one  of the Company's principal stockholders, for
two notes secured by the assets  with  an  aggregate  principal amount of
$2.2 million, bearing interest at the Company's borrowing  rate which has
ranged between 6.00% and 7.75% per annum, and a 15% minority  interest in
the  entity  purchasing the division, which has been assigned a value  of
$0.2 million.  In  March 1991, the Company made a loan to Mr. Claussen of
$368,623 for the purchase of his new residence. The interest rate on this
loan varied from 4.69%  to  7.75% per annum and equaled the interest rate
on the Company's revolving line  of  credit  under  the  Credit Facility.
Mr. Claussen paid all outstanding principal and accrued interest  on  the
loan  in  January 1996. During 1997, the Company and Mr. Claussen entered
into an employee  separation and non-competition agreement under which he
will be paid $175,000 per year for a period of five years.

     Between May 1993  and  July 1995, the Company made loans aggregating
$500,000  to  Dr.  Velez for the  purchase  and  construction  of  a  new
residence, evidenced  by  a  revolving  promissory  note  due August 2000
bearing  interest at the same rates applicable to the Company  under  its
Credit Facility.  Dr.  Velez  paid  all outstanding principal and accrued
interest on the loan in November 1997.
<PAGE>
                              PART IV

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

14(a) Consolidated Financial Statements and Schedules: PAGE

     Report of Independent Auditors                     F-1

     Consolidated Balance Sheets                        F-2

     Consolidated Statements of Operations              F-4

     Consolidated Statements of Stockholders' Equity    F-5

     Consolidated Statements of Cash Flows              F-8

     Notes to Consolidated Financial Statements         F-10

     Financial Statement Schedules:

          Schedule II - Valuation and Qualifying
                         Accounts and Reserves          F-28

     All other schedules for which provision is made in
     the applicable accounting regulations of the SEC
     are not required under the related instructions or
     are inapplicable and therefore have been omitted.

     Exhibits:

          (23a) Consent of Ernst & Young LLP            F-29
          (23b) Consent and Report of Legg Mason
                Wood Walker, Inc.                       F-30

14(b) Reports on Form 8-K.

     There were no reports on Form 8-K filed during the
     fourth quarter of 1997.

14(c) Financial Data Schedule















               Report of Independent Auditors


The Board of Directors and Shareholders
CTA INCORPORATED

We  have  audited the accompanying consolidated  balance  sheets  of  CTA
INCORPORATED  and  subsidiaries as of December 31, 1997 and 1996, and the
related consolidated  statements of operations, stockholders' equity, and
cash flows for each of  the  three years in the period ended December 31,
1997.  Our audits also included  the  financial statement schedule listed
in the index at Item 14(a). These financial  statements  and the schedule
are  the  responsibility of the Company's management.  Our responsibility
is to express  an  opinion  on  these  financial  statements based on our
audits.

We  conducted our audits in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the 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 consolidated financial position of
CTA INCORPORATED  and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted  accounting  principles.  Also,  in  our  opinion, the
related financial statement schedule, when considered in relation  to the
basic  financial  statements  taken  as  a  whole, presents fairly in all
material respects the information set forth therein.


                                   /s/Ernst & Young LLP

Washington, D.C.
February 28, 1998



                              F-1
<PAGE>
                            CTA INCORPORATED

                       Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                           December 31
                                                     1996                1997
                                                  --------              ------
                                                      (IN THOUSANDS,
                                                    EXCEPT FOR SHARE DATA)
<S>                                               <C>                 <C>
Assets
Current assets:
   Cash and cash equivalents                       $    16               $  -
   Accounts receivable (NOTES 1 AND 3)              30,665              33,300
   Net assets of discontinued operations (NOTE 2)
                                                    34,484               -
   Other current assets (NOTE 4)                     1,690               1,222
Recoverable income taxes (NOTE 8)                    3,537               3,576
                                                    ------              ------
Total current assets                                70,392              38,098

Furniture and equipment (NOTES 1 AND 4)             11,795              11,110
   Accumulated depreciation and amortization
                                                   (8,888)             (8,066)
                                                   -------             -------
                                                     2,907               3,044

   Costs in excess of net assets acquired            5,048               -

Other assets (NOTES 1, 4, AND 8)                     5,110               4,146
                                                   -------             -------
Total assets                                       $83,457             $45,288
                                                   =======             =======
</TABLE>


                              F-2
<PAGE>
                            CTA INCORPORATED

                       Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                           December 31
                                                    1996                1997
                                                  --------            --------
                                                           (IN THOUSANDS,
                                                       EXCEPT FOR SHARE DATA)
Liabilities and stockholders' equity
<S>                                               <C>                 <C>
Current liabilities:
   Notes payable - line of credit(NOTE 5)          $28,335             $ 7,445
   Current portion of long-term debt                     -               1,667
   Accounts payable                                 10,266               5,788
   Accrued expenses (NOTE 4)                         3,686               3,156
   Excess of billings over costs and contract
   prepayments                                       2,733               2,738
   Other current liabilities                           757                 270
   Accrued tender offer (NOTE 7)                         -               2,019
   Deferred income taxes (NOTE 8)                    1,377               2,427
                                                    ------              ------
Total current liabilities                           47,154              25,510

Long-term debt, less current portion (NOTE 5)       15,000               3,333
Other long-term liabilities                          3,510                 635

Commitments and contingencies (NOTE 11)                  -                   -
Stockholders' equity (NOTE 7):
   Preferred stock, $1.00 par value, 1,000,000
   shares
    authorized and none issued                           -                   -
   Common stock, $.01 par value, 20,000,000
   shares
    authorized and 10,000,000 issued                   100                 100
   Capital in excess of par value                    7,943               7,869
   Retained earnings                                14,550              14,528
                                                    ------              ------
                                                    22,593              22,497
 Notes receivable from employees
  (NOTE 10)                                          (698)               (698)
 Treasury stock, at cost (894,704
  shares in 1996 and 1,248,980
  shares in 1997)                                  (4,102)             (5,989)
                                                   -------             -------
Total stockholders' equity                          17,793              15,810
                                                   -------             -------
Total liabilities and stockholders' equity         $83,457             $45,288
                                                   =======             =======
</TABLE>
SEE ACCOMPANYING NOTES.       F-3
<PAGE>
                            CTA INCORPORATED

                  Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                           Year ended December 31
                                 1995              1996               1997
                               -------            -------           --------
                                   (IN THOUSANDS, EXCEPT FOR SHARE DATA)
(S)                            <C>                <C>               (C)
Contract revenues              $105,224           $96,246           $92,239
 Cost of contract revenues       96,633            87,644            80,503
Selling, general and
 administrative expenses          4,117             5,431             7,649
Supplemental ESOP
 contribution (NOTE 6)              -                 -               2,958
Other expenses                     (292)            2,447               710
                               --------           -------            ------
Operating profit                  4,766               724               419
Interest expense                    850               969             1,589
                                  -----               ---             -----
Income (loss) before
  income taxes                    3,916              (245)           (1,170)
Income taxes (benefit) (NOTE 8)   1,567               (80)             (500)
                                  -----              ----            ------
Income (loss) from continuing
  operations                      2,349              (165)             (670)
 Discontinued operations(NOTE 2):
  Income (loss) from discontinued
    operations, net of income taxes  62           (10,872)            (3,272)
  Gain (loss) on disposal of
    segments, net of income taxes  (465)              -                3,920
                                   ----           -------             ------

Income (loss) from discontinued
 operations                        (403)          (10,872)               648
                                  -----          --------               ----
Net income (loss)                $1,946          $(11,037)              $(22)

Earnings (loss) per share
 (NOTE 9):
   Continuing operations         $  .27          $   (.02)          $   (.07)
   Discontinued operations         (.05)            (1.22)               .07
                                 ------          --------           --------
Earnings (loss) per share        $  .22          $  (1.24)          $    .00

Earnings (loss) per share -
   assuming dilution (NOTE 9):
   Continuing operations         $  .25          $   (.02)          $   (.07)
   Discontinued operations         (.04)            (1.22)               .07
                                 ------          --------           --------
Earnings (loss) per share -
assuming dilution                $  .21          $  (1.24)          $    .00
</TABLE>
SEE ACCOMPANYING NOTES.

                              F-4
<PAGE>
                            CTA INCORPORATED

             Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>

                   Common   Stock  Capital          Notes
                  ---------------   in              Rcv      Treasury Stock
                             Par   Excess  Retained from   -----------------
                   Shares    Value  Par    Earnings Empl    Shares      Cost
                 ---------- -----  -----   -------  ----   ---------  ------
                                 (IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S>              <C>         <C>   <C>     <C>      <C>  <C>           <C>
Balance at
January 1, 1995  10,000,000  $100  $8,872  $23,641  $ -   1,108,370    $4,663
Purchase of
treasury stock        -        -      -       -       -     147,684       684

Exercise of stock
options               -        -      (46)    -       -     (79,000)     (283)
Compensatory
issuance of common
stock to
employees/
directors             -        -       58     -       -     (52,274)     (187)

Issuance of stock
for acquisition
notes payable         -        -       89     -       -     (79,872)     (286)

Purchase of
treasury stock
from ESOP             -        -       -      -       -     276,200     1,296

Net income            -        -       -     1,946    -        -          -
                  ---------- ------  -----  ------ -----    -------     -----
Balance at December
31, 1995         10,000,000   100   8,973   25,587    -   1,321,108     5,887

Purchase of
treasury stock        -        -       -      -       -     125,368       590

Sale of treasury
stock                 -        -         8    -       -      (7,826)      (28)

Exercise of stock
options               -        -    (1,452)   -       -    (449,340)   (1,935)
</TABLE>



                                    F-5
<TABLE>
<CAPTION>
<S>              <C>        <C>    <C>    <C>     <C>       <C>          <C>
Compensatory
issuance of common
stock to
employees/
directors             -        -         7    -       -     (15,576)      (67)

Issuance of stock
for acquisition
notes payable         -        -        30    -       -     (79,030)     (345)

Tax benefit of
non-qualified
stock options
exercised             -        -       377    -       -        -           -

Issuance of stock
to employees for
notes receivable      -        -        -     -      698       -           -

Net loss              -        -        -  (11,037)   -        -           -
                ------------ ----  ------- -------- ----    --------    ------
Balance at December
31, 1996          10,000,000  100    7,943  14,550   698    894,704     4,102

Purchase of
treasury stock
(NOTE 7)              -        -        -     -       -     466,500     2,381

Exercise of stock
options               -        -      (191)   -       -     (89,870)     (392)

Compensatory
issuance of common
stock to
employees/
directors             -        -        12    -       -     (22,354)     (102)

Tax benefit of
non-qualified
stock options
exercised             -        -       105    -       -        -           -

Net loss              -        -        -      (22)   -        -           -
                  ---------- ----   ------ -------  ----  ---------   -------
Balance at December
31, 1997          10,000,000 $100   $7,869 $14,528  $698  1,248,980   $ 5,989
</TABLE>
SEE ACCOMPANYING NOTES.

                              F-6


                        CTA INCORPORATED

            Consolidated Statements of Cash Flows



<TABLE>
<CAPTION>
                                                  Year Ended December 31
                                             -------------------------------
                                             1995        1996           1997
                                           -------    ---------     ---------
                                                      (IN THOUSANDS)
Operating activities
<S>                                        <C>        <C>             <C>
Net income (loss)                          $ 1,946    $(11,037)       $   (22)
Adjustments to reconcile net
 income (loss) to  net cash
 provided by (used in) operating
 activities:
   Loss on disposal of SIM                     718        -              -
   Gain on disposal of segments                 -         -            (3,920)
   Depreciation and amortization:
    Furniture and equipment                  2,877       3,734          2,612
    Capitalized software development costs     131       1,108             76
    Other noncurrent assets                    610       1,018            390
    Deferred lease incentives                 (382)       (292)          (271)
   Provision for receivable allowances        (990)        300            360
   Accrued interest on subordinated debt     1,063       1,034         (3,590)
   Other noncash expenses                      432          (8)          (224)
   Changes in assets and liabilities:
    Accounts receivable                       (233)     (4,106)           901
    Recoverable income taxes                (2,707)       (639)          (906)
    Other assets                               933      (2,353)           463
    GEMnet investment                       (1,011)      6,437             -
    Accounts payable and accrued expenses    5,089       1,595         (5,017)
     Excess of billings over costs and contract
     prepayments                            (4,816)      1,556         (3,180)
    Deferred income taxes, net              (1,299)     (3,900)         2,100
                                            ------      ------         ------
Net cash provided by (used in) operating
 activities                                  2,361      (5,553)       (10,228)

Investing activities:
 Investments in furniture and equipment     (4,327)     (6,469)        (3,584)
 Proceeds from sale of segments               -           -            18,000
 Capitalized computer software                (832)        (87)          -
 Other                                        -            351           -
                                            ------      ------         ------
Net cash provided by (used in) investing
  activities                                (5,159)     (6,205)        14,416
</TABLE>

                             F-7
<PAGE>
                      CTA INCORPORATED

      Consolidated Statements of Cash Flows (continued)



<TABLE>
<CAPTION>
                                                 Year Ended December 31
                                         1995            1996            1997
                                        ------         --------        ------
                                                       (IN THOUSANDS)
Financing activities
<S>                                      <C>             <C>           <C>
Net borrowings (payments) under
    bank line of credit agreement        1,324           12,011        (8,684)
 Proceeds from term loan                  -                -            5,000
 Repayment of subordinated debt           -                -             (450)
 Repayment of acquisition notes           (375)            (375)         -
 Proceeds from deferred lease incentives   150              315          -
 Purchase of treasury stock             (1,980)            (458)         (104)
 Proceeds from exercise of stock options    12               10            34
 Other                                    -                  36          -
                                        ------           ------        ------
Net cash provided by (used in) financing
 activities                               (869)          11,539        (4,204)
                                        ------           ------        ------
Net decrease in cash and cash
 equivalents                            (3,667)            (219)          (16)
Cash and cash equivalents at
  beginning of period                    3,902              235            16
                                         -----              ---           ---
Cash and cash equivalents at
  end of period                        $   235            $  16         $  -
                                       =======            =====         =====

 Supplemental Information
 Cash paid during the year for:
   Income taxes                       $  5,115         $    226      $    117
   Interest                           $  2,863         $  2,836      $  8,807
 Noncash investing and financing
  activities:
   Debt assumed by purchaser (NOTE 2) $   -            $   -         $ 27,000
   Purchase of treasury stock (NOTE 7)$   -            $   -         $  2,019
   Investment in EarthWatch           $   -            $  2,038      $   -
   Conversion of note to common stock $    375         $    375      $   -
   Common stock issued for notes      $    225         $    473      $   -
</TABLE>
SEE ACCOMPANYING NOTES.
                              F-8
<PAGE>
                      CTA INCORPORATED

         Notes to Consolidated Financial Statements

                      December 31, 1997


1. The Company and Significant Accounting Policies

CTA   INCORPORATED   (the   Company)   provides   information
technology services to Federal, State and commercial  markets
including    Year   2000   services,   network   design   and
implementation,   mainframe   to  client-server  conversions,
software   language   upgrades,  database   development   and
maintenance,  electronic   data   interchange  and  automated
enterprise management technologies.  During 1995, the Company
disposed of its aircraft simulation  systems business. During
1997,    the    Company    disposed   of   its   Space    and
Telecommunications Systems and  its  Mobile  Information  and
Communications Services businesses.

Principles of Consolidation

The consolidated financial statements include the accounts of
the  Company  and its subsidiaries.  Significant intercompany
accounts   and   transactions   have   been   eliminated   in
consolidation.

Use of Estimates

The preparation of  financial  statements  in conformity with
generally accepted accounting principles requires  management
to  make  estimates  and  assumptions that affect the amounts
reported in the financial statements  and accompanying notes,
in particular, estimates of contract cost  and  revenues used
in  the  earnings recognition process.  Actual results  could
differ from those estimates.

An  important  focus  of  the  Company's  efforts  to  pursue
commercial  markets  is to assist state and local governments
and commercial companies  address  the  Year  2000 Issue with
their information systems. The Year 2000 Issue arises because
many  electronic  data processing systems will be  unable  to
process year-date data  accurately  beyond the year 1999. The
Company  believes  it  has  instituted  reasonable   contract
management   practices  to  control  the  financial  risk  of
performance on these contracts.

Cash and Cash Equivalents

The Company considers highly liquid investments with original
maturities of three months or less to be cash equivalents.



                              F-9
                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)

1. The   Company    and   Significant   Accounting   Policies
   (continued)

Furniture and Equipment

Furniture and equipment are carried at cost.  Depreciation is
computed  based  upon  accelerated  methods  using  estimated
useful lives of three to seven years.  Leasehold improvements
are amortized on a straight-line  basis over the terms of the
leases,  which  range  from  one  to  ten  years.   Purchased
computer  software  used  by the Company is  amortized  on  a
straight-line basis over a three-year period.

Contracts Revenues and Related Contract Costs

Revenues  result  from  services   performed   for  the  U.S.
government and commercial customers under a variety  of long-
term  contracts  and subcontracts, some of which provide  for
reimbursement of costs plus fixed fees and/or award fees, and
others which are fixed-price  type.   Revenues  on  cost-type
contracts  are recognized as costs are incurred on the  basis
of direct costs  plus  allowable  indirect  expenses  and  an
allocable  portion  of  a fixed fee.  Award fees on cost-type
contracts are recognized  as earned.  Revenues on fixed-price
type  contracts  are  recognized   using  the  percentage-of-
completion  method  of accounting, based  on  contract  costs
incurred  to date compared  with  total  estimated  costs  at
completion  or  other  measures  of progress on the contract.
Estimated  contract revenue at completion  includes  contract
incentive fees  at  estimated  realizable  amounts.  Revenues
from  time  and materials contracts are recognized  based  on
hours  worked  at  amounts  represented  by  the  agreed-upon
billing amounts.

When adjustments  in  contract  value  or estimated costs are
determined, any changes from prior estimates are reflected in
earnings  in  the  current  period.   The  effect   of  these
adjustments  could be material to interim or annual operating
results.  The  Company  provides  for  anticipated losses, if
any, on contracts and allowances for receivables  during  the
period in which they are first identified.

Contract   costs,  including  indirect  costs  for  cost-type
contracts,   are    subject    to    audit    by   government
representatives.  Such  audits  have  been completed  through
1992.   Management  believes  that any adjustments  resulting
from  determinations  for  subsequent  periods  and  contract
close-outs  will  not  have  a  significant   impact  on  the
Company's  consolidated  financial  position  or  results  of
operations.

                              F-10
<PAGE>
                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



1.   The   Company   and   Significant   Accounting  Policies
(continued)

Stock-Based Compensation

Compensation  expense  is  recognized for stock  options  and
other stock grants to the extent  the  exercise price is less
than the fair market value of the Company's  common  stock at
the date of grant.

New Accounting Pronouncements

In  1997,  the  Financial  Accounting  Standards Board issued
Statement of Financial Accounting Standards  (SFAS)  No. 128,
EARNINGS PER SHARE. SFAS No. 128 replaced the calculation  of
primary  and  fully diluted earnings per share with basic and
diluted earnings  per  share.  Unlike  primary  earnings  per
share, basic earnings per share excludes any dilutive effects
of  options,  warrants  and  convertible  securities. Diluted
earnings per share is very similar to the previously reported
fully  diluted  earnings  per share. All earnings  per  share
amounts  for  all periods presented  have  been  restated  to
conform to the SFAS No.128 requirements (see Note 9).

The Company adopted  SFAS No. 131, DISCLOSURES ABOUT SEGMENTS
OF AN ENTERPRISE AND RELATED  INFORMATION,  in 1997. SFAS No.
131  supercedes SFAS No. 14, replacing the "industry  segment
approach"  with  the "management approach," whereby companies
report  financial and  descriptive  information  about  their
operating  segments. Operating segments are revenue-producing
components of  the  enterprise  for  which separate financial
information  is  produced  internally  and   are  subject  to
evaluation by the chief operating decision maker  in deciding
how to allocate resources to segments (see Note 13).

Reclassifications

Certain prior year balances have been reclassified to conform
with the current period presentation.








                            F-11
                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



2. Disposal of Segments

In   August   1997,   the   Company   sold   its   Space  and
Telecommunications  Systems  and  its Mobile Information  and
Communications  Services  businesses   to   Orbital  Sciences
Corporation   in  exchange  for  $18  million  in  cash   and
assumption by Orbital  of certain liabilities of the Company.
In addition, Orbital paid  to  certain lenders of the Company
an aggregate of $27 million in partial  satisfaction  of  the
Company's  obligations  to  such  lenders. The final purchase
price  is  subject to certain adjustments,  however,  in  the
opinion of management,  such  adjustments,  if  any, will not
have a material effect on the financial position or the fuure
results  of  operations of the Company. The Company  also  is
entitled to receive certain deferred consideration for future
sales of STARBus  satellites  and  satellite busses and 3% of
all   cumulative  revenues  attributable   to   the   GEMtrak
monitoring  system  in  excess  of  a threshold amount of $50
million.

The consolidated statements of operations  exclude  sales and
expenses  of discontinued operations from captions applicable
to continuing operations. The discontinued operations include
an allocation  of interest expense based on the proportion of
debt paid by Orbital  to the Company's total debt outstanding
at  the  time  of the sale.  Interest  expense  allocated  to
discontinued  operations  was  $2.1  million  in  1997,  $3.3
million in 1996  and  $3.2  million in 1995. Net sales of the
Space and Telecommunications  Systems  business  prior to its
disposition were $66.8 million in 1997, $83.5 million in 1996
and  $111.8  million  in  1995.  There were no sales for  the
Mobile Information and Communications Services business prior
to its disposition. The income (loss)  from operations of the
disposed  businesses  was  $(3.3)  million in  1997,  $(10.9)
million in 1996 and $1.3 million in  1995, net of income tax.
The  operating  loss in 1996 includes charges  totaling  $9.2
million related to  lower profitability on a contract and the
write-off of the investment  in  GEMnet.  The  1997 gain from
disposal  of the businesses was $3.9 million, net  of  income
tax.  The income  tax  provision  (benefit)  related to these
discontinued  segments  was  $(1.4)  million in 1997,  $(5.6)
million in 1996 and $0.9 million in 1995.






                              F-12


                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



2. Disposal of Segments (continued)

During 1997, the Company also sold its  Advanced  Information
Systems  (AIS)  division for approximately $0.4 million.  The
net contract revenues  of  AIS  prior to its disposition were
$0.9 million in 1997, $2.9 million  in  1996 and $3.7 million
in 1995 and are included in continuing operations.

In  September  1995, the Company sold its Simulation  Systems
Division  (SIM)  to   a   former  director  and  a  principal
stockholder of the Company  and  other  investors in exchange
for two notes secured by the assets of the  division  with an
aggregate  principal amount of $2.2 million, bearing interest
at the Company's  borrowing  rate and a 15% minority interest
in the purchasing entity, valued at $0.2 million.  The assets
of  the  division consisted primarily  of  a  cockpit  flight
simulator  and  various  fixed assets, which had an aggregate
net book value of $3.1 million. Realization of the investment
and  notes receivable totaling  $0.2  million  are  dependent
primarily  on  the  future success of the business and/or the
collateral securing the note, while the realization of a note
totaling $1.8 million  is  dependent on the proceeds from the
use  or  sale of the simulator.   The  investment  and  notes
receivable   are  periodically  reviewed  by  management  for
impairment considering,  among  other  factors, the estimated
fair value of the collateral.

Net sales of SIM prior to its disposition  were  $0.5 million
in 1995.  The loss from operations of the SIM business, which
is  reported in discontinued operations, was $1.3 million  in
1995,  net of income tax.  The 1995 loss from disposal of the
business was $0.5 million, net of income tax.  The income tax
benefit  related  to  this  discontinued  business  was  $1.2
million in 1995.














                              F-13
                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)


3. Accounts Receivable

<TABLE>
<CAPTION>
                                                          December 31
                                                  1996                  1997
                                                 -------              -------
Accounts receivable:                                     (IN THOUSANDS)
 U.S. Government:
<S>                                               <C>                 <C>
   Billed                                         $21,969             $17,556
   Unbilled:
     Contracts in progress                          6,106               4,659
     Amounts awaiting contractual coverage
                                                    4,338               4,192
     Revenue awaiting government approval of final
     indirect rates or contract close-out
                                                    1,360                 242
  Commercial Customers:
   Billed                                               -               5,646
   Unbilled:
    Contracts in progress                               -               4,473
                                                   33,773              36,768
   Less allowances                                 (3,108)             (3,468)
                                                  $30,665             $33,300
</TABLE>

Contracts  in progress consist primarily of revenues on long-
term  contracts   that   have   been   recognized  under  the
percentage-of-completion method for accounting  purposes  but
not  billed  to  customers.   These amounts generally will be
billable  upon  product delivery  or  satisfaction  of  other
contract requirements.

Amounts awaiting  contractual  coverage  include  amounts for
which  the  Company  expects to obtain the necessary contract
modifications in the normal  course of business.  At December
31,  1996  and  1997, approximately  $2.9  million  and  $2.2
million respectively, is related to situations where disputes
regarding the extent of contractual coverage have resulted in
legal actions or  formal  claims.   The  Company has provided
allowances  that  it  believes  adequately  provide  for  the
resolution  of these and other matters.  The Company  expects
to realize substantially  all billed and unbilled receivables
within one year.








                              F-14
                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



4. Composition of Certain Financial Statement Balances

<TABLE>
<CAPTION>
                                                            December 31
                                                     1996                1997
                                                    ------             -------
                                                         (IN THOUSANDS)
Other current assets:
<S>                                                 <C>                 <C>
   Receivables from employees and stockholders
   (NOTE 10)                                         $1,175            $    76
   Prepaid expenses                                     253                495
   Other                                                262                651
                                                     ------             ------
                                                     $1,690             $1,222
Furniture and equipment:
 Data processing equipment                           $8,353             $7,513
 Office furniture and equipment                       2,425              2,805
 Other equipment                                        351                115
 Leasehold improvements                                 666                677
                                                     ------              -----
                                                     11,795             11,110
 Accumulated depreciation and amortization
                                                     (8,888)            (8,066)
                                                    -------            -------
                                                    $ 2,907             $3,044
Other assets:
 Investment in and notes receivable from SIM (NOTE
 2)                                                  $2,138             $2,218
   Capitalized software costs, net                      525                -
   Deferred tax asset (NOTE 8)                        1,385                935
   Other                                              1,062                993
                                                     ------             ------
                                                     $5,110             $4,146
Accrued expenses:
 Salaries and incentives                             $3,253             $3,106
 Employee benefit plans                                 147                -
 Other                                                  286                 50
                                                     $3,686             $3,156
</TABLE>






                              F-15



                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



5. Notes Payable and Subordinated Debt

Bank Debt

In November 1997, the Company  entered  into a new three-year
agreement  with  a  bank  for  a  revolving  credit  facility
providing the availability to borrow up to $15 million, which
includes  a facility for letters of credit up to  $4  million
and which also  provides  a  new $5 million term facility. At
December 31, 1997, there was $7.4  million  outstanding under
the  revolving  credit  facility  and $5 million  outstanding
under  the  term facility, to be repaid  in  equal  quarterly
payments.

Borrowings  under   the   credit   facility  are  secured  by
substantially all of the Company's assets  and  bear interest
at either the lender's prime rate or LIBOR plus 1.5% to 2.25%
(based  on  the  Company's  ratio  of  total  funded debt  to
earnings    before    interest,   taxes,   depreciation   and
amortization)  at  the Company's  discretion.   The  weighted
average rate in effect  for short-term borrowings at December
31, 1997 was approximately  7.7%.   Under  the agreement, the
Company  pays an annual commitment fee on the  unused  credit
line and an  annual administration fee on the total revolving
credit line. The credit facility requires advance approval by
the bank for the  Company  to  pay  dividends.  The agreement
also includes financial covenants which  require  the Company
to  maintain  certain financial ratios and restricts  capital
expenditures.

The  balance outstanding  at  December  31,  1996  under  the
previous  credit  facility  was  $28.3  million. The weighted
average interest rate in effect for short-term  borrowings at
that date was approximately 7.6%.

Subordinated Debt

In  December  1993, the Company entered into a note  purchase
agreement (the  "Notes  Agreement") providing for $15 million
aggregate principal amount  of unsecured, senior subordinated
notes (the "Notes").  The Notes  bore  interest  at 12.0% per
annum (13.0% effective April 1, 1996), payable quarterly. The
Company  was  required  at  the  election  of  the holder  to
repurchase  the  Notes  at the unpaid principal amount,  plus
accrued interest, at the  occurrence  of  a transaction which
resulted in a change in

                              F-16



                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)

5. Notes Payable and Subordinated Debt (continued)

control of ownership of the Company or a "Qualifying Sale" of
the Company's common stock as defined by the Notes Agreement.
The  Notes  also provided for payment of contingent  interest
over and above  the 13.0% fixed rate upon the occurrence of a
"Qualifying   Sale."    The    sale    of   the   Space   and
Telecommunications Systems business as described  in  Note  2
was  a  "Qualifying Sale." As a result, the subordinated debt
was  repaid   along  with  accrued  interest  and  contingent
interest of $5.8 million.

6. Employee Benefit Plans

Substantially all  of the Company's employees are eligible to
participate in the Company's  employee  stock  ownership plan
(ESOP).    The  ESOP  is  designed  to  enable  participating
employees to  share  in  the  growth  and  prosperity  of the
Company   while   providing  them  with  the  opportunity  to
accumulate capital  for  their  future.  The ESOP allows only
Company  contributions,  in  cash  or  in  common  stock,  as
determined by the Board of Directors.  During 1997, the Board
elected  to  make  a  one-time supplemental  contribution  of
approximately $2.9 million. Contributions are proportionately
allocated  on  the  basis   of  each  eligible  participant's
compensation.  Employee vesting  in  benefits ranges from 40%
at the end of two years to 100% at the  end  of  four  years.
Shares of the Company's common stock which may ultimately  be
distributed by the ESOP to participants carry certain limited
provisions  for  repurchase by the Company.  Through December
31, 1997, no shares  of  the Company's common stock have been
distributed by the ESOP. At  December  31, 1996 and 1997, the
ESOP owned 1,029,440 and 1,615,318 shares,  respectively,  of
the  Company's common stock, all of which have been allocated
to plan participants.

The Company  and  its  subsidiaries  maintain  401(k) savings
plans  which  allow  for  Company  and employee contributions
based  upon  a  percentage  of  the participating  employee's
salary.   Employee  vesting in Company  contributions  ranges
from  one to four years.  The  Company's  401(k)  plan  owned
140,000  shares of the Company's common stock at December 31,
1996 and 1997.

Amounts  charged  to  expense  under  the  above  plans  were
approximately  $2.1  million,  $2.0  million and $4.2 million
(including the supplemental contribution) for the years ended
December 31, 1995, 1996 and 1997, respectively.   The Company
currently  provides  no  significant  other  post  retirement
benefits.

                              F-17

                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)

7. Common Stock and Stock Options

All  of the Company's outstanding shares contain restrictions
on transferability.   Shares  of  common  stock  held  by the
Company's  principal  stockholder  are  subject to a buy-sell
arrangement  with  the  Company  which  contains   repurchase
features  under  specified  circumstances.   At December  31,
1997, none of the specified circumstances exist.

The  Company  completed a tender offer for 399,946  shares  at
$5.05 per share  on  December  31,  1997  which  resulted in a
corresponding  increase  of  treasury  stock.  The  Board   of
Directors  declared  a  two-for-one stock split for all shares
outstanding on January 15,  1998  which  is  reflected for all
periods presented in these financial statements.

In December 1991, the Company adopted the 1991  Stock  Option
and Purchase Plan which reserves 2,600,000 common shares  for
the  granting  of incentive or non-qualified stock options or
stock  purchase  rights   through   2001.   The  Compensation
Committee of the Board of Directors is  authorized  to  grant
options  and  purchase rights and to establish the respective
terms, subject  to  certain  restrictions.  Options generally
are for terms of five to ten years  and  provide  for vesting
periods of three years.  As of December 31, 1997, options for
1,504,750 shares are available for grant under this plan. The
weighted  average grant date fair value of an option  granted
during the  years  ended December 31, 1995, 1996 and 1997 was
$2.03, $1.91 and $1.60,  respectively.   The Company uses the
Black-Scholes model to estimate the fair values  of  options,
assuming  a  risk-free  interest rate equal to the ninety-day
U.S. Treasury Bill rate, expected lives of five to ten years,
an  expected  volatility  factor  of  .236  and  no  expected
dividends.  The Company recognized  no  compensation  expense
for  stock option grants during the three years in the period
ended December 31, 1997.











                              F-18


                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



7. Common Stock and Stock Options (continued)


<TABLE>
<CAPTION>
                                                   Number of Shares
                                                 Year ended December 31
                                               1995        1996       1997
                                            ---------    -------   ---------
<S>                                         <C>          <C>       <C>
Options outstanding at beginning of year
 (weighted average exercise price of $2.08
 in 1995, $1.90 in 1996 and $3.96 in 1997)
                                            1,175,950    934,450   1,282,126
 Granted (weighted average exercise price of
 $4.68 in 1995, $4.74 in 1996 and $5.05 in
 1997)                                         30,500    799,016      13,574
 Canceled (weighted average exercise price
 of $3.04 in 1995, $2.09 in 1996 and $4.61
 in 1997)                                    (193,000)    (2,000)   (357,950)
 Exercised (weighted average exercise price
 of $3.00 in 1995, $1.07 in 1996 and $2.24
 in 1997)                                     (79,000)  (449,340)    (89,870)
                                            ---------   --------    --------
Options outstanding at end of year
 (weighted average exercise price of $1.90
 in 1995, $3.96 in 1996 and $4.08 in 1997)
                                              934,450  1,282,126     847,880
                                            =========  =========    ========
 Options exercisable at end of year
 (weighted average exercise price of $1.66
 in 1995, $2.48 in 1996 and $3.16 in 1997)
                                              824,244    391,022     462,648
                                              =======    =======     =======
</TABLE>
















                              F-19
<PAGE>
                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



7. Common Stock and Stock Options (continued)

<TABLE>
<CAPTION>
Range of Exercise Prices                          December 31, 1997
<S>                                                     <C>
$2.01-$3.00:
 Options outstanding:
   Number of shares                                     266,000
   Weighted average exercise price                        $2.17
   Weighted average remaining contractual life (in          1.7
   years)
 Options exercisable:
   Number of shares                                     266,000
   Weighted average exercise price                        $2.17
$3.58-$5.05:
 Options outstanding:
   Number of shares                                     581,880
   Weighted average exercise price                        $4.95
   Weighted average remaining contractual life (in          3.2
   years)
 Options exercisable:
   Number of shares                                     196,648
   Weighted average exercise price                        $4.49
</TABLE>

Pro  forma   compensation  expense  associated  with  options
granted  subsequent   to   December  31,  1994  generally  is
recognized over a three year  vesting  period; therefore, the
initial  impact of applying SFAS No. 123  on  pro  forma  net
income (loss)  for 1995 and 1996 is not representative of the
impact on pro forma net income in 1997 and future years, when
the pro forma effect  is  fully  reflected. The Company's pro
forma information follows:

<TABLE>
<CAPTION>
                                                 Year ended December 31
                                           1995         1996          1997
                                          ------       ------       -------
                                         (IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S>                                       <C>          <C>           <C>
Pro forma income (loss) from
   continuing operations                  $2,325       $(327)        $(964)
Pro forma earnings (loss) per share
        Basic                               $.26       $(.04)        $(.10)
        Diluted                             $.24       $(.04)        $(.10)
</TABLE>

                              F-20
<PAGE>

                    CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)


8. Income Taxes

The  provision  (benefit)  for  income  taxes attributable to
continuing operations consisted of the following components:

<TABLE>
<CAPTION>
                                               Year ended December 31
                                          1995           1996          1997
                                        -------         ------        ------
                                                   (IN THOUSANDS)
Current:
<S>                                     <C>              <C>         <C>
 Federal                                $ 2,140          $(20)       $(2,400)
 State                                      410            -            (200)
                                        -------          ----        -------
                                          2,550           (20)        (2,600)
Deferred:
 Federal                                   (875)          (50)         2,000
 State                                     (108)          (10)           100
                                        -------          ----        -------
                                           (983)          (60)         2,100
                                        -------          ----        -------
                                        $ 1,567          $(80)         $(500)
                                        =======          ====        =======
</TABLE>

Deferred  income  taxes  reflect  the  net  tax   effects  of
temporary differences between the carrying amounts  of assets
and  liabilities  for  financial  reporting purposes and  the
amounts used for income tax purposes.  Significant components
of the Company's deferred tax assets  and  liabilities are as
follows:























                            F-21
<PAGE>
                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



8. Income Taxes (continued)
<TABLE>
<CAPTION>
                                                        December 31
                                                    1996         1997
                                                   ------       ------
                                                        (IN THOUSANDS)
Current deferred tax liabilities:
<S>                                                <C>          <C>
 Unbilled receivables                              $5,820       $5,425
 Other                                                185          135
                                                   ------       ------
                                                    6,005        5,560
Current deferred tax assets:
 Contract provisions and allowances                 3,707        2,482
 Accrued vacation                                     704          510
 Other accruals                                       217          141
                                                    -----       ------
                                                    4,628        3,133
                                                   ------       ------
Net current deferred tax liabilities               $1,377       $2,427
                                                   ======       ======
Long-term deferred tax assets:
 Accrued interest on subordinated debt             $1,240       $  -
 Net operating loss carryforward                      504          350
 Other                                                145          935
                                                   ------       ------
                                                    1,889        1,285
 Less: valuation allowance                           (504)        (350)
                                                   ------       ------
Net long-term deferred tax assets                  $1,385       $  935
                                                   ======       ======
</TABLE>

A  reconciliation  of  income  tax  expense at the  statutory
Federal  rate  to  income tax expense related  to  continuing
operations at the Company's  effective  income tax rate is as
follows:

<TABLE>
<CAPTION>
                                                Year ended December 31
                                          1995          1996           1997
                                         ------        -----          ------
                                                   (IN THOUSANDS>

<S>                                      <C>           <C>            <C>
Federal income taxes at statutory rate   $1,331        $(83)          $(398)
State income taxes, net of Federal tax
benefit                                     181         (31)            (60)
Other                                        55          34             (42)
                                         ------       -----           -----
                                         $1,567        $(80)          $(500)
                                         ======       =====           =====
</TABLE>




                            F-22
<PAGE>
                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



9. Earnings Per Share

The following table sets forth the computation of basic and
diluted earnings per share:

<TABLE>
<CAPTION>
                                                 Year ended December 31
                                            1995           1996        1997
                                          --------       --------    --------
                                        (IN THOUSANDS, EXCEPT FOR SHARE DATA)
Numerator:
<S>                                        <C>          <C>         <C>
 Income (loss) from continuing operations  $2,349       $   (165)   $  (670)
 Income (loss) from discontinued
 operations                                  (403)       (10,872)       648
Net income (loss) for both basic and
                                           ------       --------    -------
diluted earnings per share                 $1,946       $(11,037)   $   (22)

Denominator:
 Denominator for basic earnings
   per share ---
     Weighted average shares outstanding   8,862,530    8,875,086   9,092,214
 Dilutive potential common shares:
     Employee stock options                  556,006         -           -
                                           ---------    ---------   ---------
Denominator for diluted earnings per share
--- Adjusted weighted average shares and
assumed conversions                         9,418,536   8,875,086   9,092,214
</TABLE>

Due to a loss from continuing operations  in  1996  and 1997,
employee  stock options are considered anti-dilutive and  not
included in the denominator for diluted earnings per share.









                              F-23

                         CTA INCORPORATED

     Notes to Consolidated Financial Statements (continued)



10. Transactions with Related Parties

The Company made loans in prior years to two of its principal
stockholders  for  relocation costs that include the purchase
of new residences.   The  loans  were  made  in  exchange for
promissory  notes  and  were  secured  by  deeds of trust  on
residential property.  The loans bore interest  at  the  same
rates  applicable  to the Company's revolving line of credit.
The remaining indebtedness  of  approximately $111,000 on one
of these loans was paid in 1996.  The  remaining  outstanding
loan of approximately $600,000 was repaid in 1997.

The  Company  made loans in prior years totaling $884,000  to
certain officers  and  employees  related  to the exercise of
options  to  acquire  common stock.  Amounts related  to  the
stock  exercise  price  are   presented  as  a  reduction  of
stockholders' equity.  The notes  are for five years and bear
interest at the same rates paid by the Company.

11. Commitments and Contingencies

Operating Leases

The Company has operating leases for  all of its office space
and  various  computer  and office equipment.   Most  of  the
office space leases require  the  Company  to pay maintenance
and operating expenses such as taxes, insurance and utilities
and also include provisions for renewal.

Certain  of the leases contain provisions for  periodic  rate
escalations  to  reflect changes in the consumer price index.
Total rent expense  from  continuing operations for the years
ended December 31, 1995, 1996 and 1997 was $3.1 million, $2.7
million and $2.4 million, respectively.










                              F-24

                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



11. Commitments and Contingencies (continued)

Operating Leases (continued)

At December 31, 1997, total future minimum rental commitments
under non-cancelable leases  are  summarized  as  follows (in
thousands):

<TABLE>
<CAPTION>
<S>                                    <C>
1998                                   $  2,650
1999                                      1,743
2000                                        794
2001                                        544
2002                                        354
2003 and after                              321
                                       --------
                                       $  6,406
                                       ========
</TABLE>

At  December  31,  1997,  the  Company  had  a  6.75% limited
partnership  interest in its corporate headquarters  building
in Rockville, Maryland that vests up to 9.5% over the life of
the lease.

Litigation

In October 1996,  a former employee of the Company filed suit
against the Company  alleging,  among other things, breach of
contract  in  connection  with  a profit  sharing  agreement.
Subsequently, the litigation was  stayed  by agreement of the
parties  because  the  profit  sharing agreement  called  for
mandatory and binding arbitration.   The  Company  intends to
vigorously  defend  itself against the claims. Management  of
the Company, after reviewing developments with legal counsel,
is of the opinion that  the  outcome  of this matter will not
have a material adverse effect on the financial  position  or
future operations of the Company.

The   Company   is   involved  in  certain  other  litigation
incidental to its business.  Management of the Company, after
reviewing developments  with legal counsel, is of the opinion
that the outcome of such  matters  will  not  have a material
adverse effect on the financial position or future operations
of the Company.




                            F-25

                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



12. Other Information

Major Customers

The  percentage  of  contract  revenues  from U.S. Government
customers that comprise 10% or more of total revenues were as
follows:

<TABLE>
<CAPTION>
                                              Year ended December 31
                                      1995            1996            1997
                                      ----            ----            ----
<S>                                    <C>             <C>             <C>
    Department of Defense              64%             63%             47%
    General Services Administration    17%             14%             16%
</TABLE>

13. Operating Segments

The Company has two principal operating segments: Federal and
Commercial Information Technology Systems.  Segment  data has
been  adjusted  from  previously  reported amounts to reflect
treatment of the Space and Telecommunications Systems and the
Mobile Information and Communications Services businesses and
Simulation Systems Division as discontinued  operations.  The
following  table  provides  certain financial information for
each operating segment:

<TABLE>
<CAPTION>
                                               Year ended December 31
                                      1995             1996            1997
                                     ------           ------          ------
                                                   (IN MILLIONS)
Contract revenues:
<S>                                  <C>              <C>              <C>
 Federal                             $105.2            $91.9           $73.4
 Commercial                             -                4.3            18.8
                                     ------            -----           -----
                                     $105.2            $96.2           $92.2
Operating profit (loss):
 Federal                             $  4.5           $  2.4          $  3.0
 Commercial                             -                0.7             1.1
 Other expense                          0.3             (2.4)           (3.7)
                                     ------           ------          ------
                                     $  4.8           $  0.7          $  0.4
</TABLE>





                              F-26


                      CTA INCORPORATED

   Notes to Consolidated Financial Statements (continued)



13. Operating Segments (continued)

<TABLE>
<CAPTION>
                                              Year ended December 31
                                         1995         1996          1997
                                        ------       ------        ------
                                                  (IN MILLIONS)
Depreciation and amortization expense:
<S>                                    <C>           <C>           <C>
 Federal                                $  1.6       $  2.4        $  0.8
 Commercial                                 -            -            0.4
 Discontinued operations                   1.6          3.2           1.6
Capital expenditures:
 Federal                                $  1.4       $  1.0        $  0.4
 Commercial                                 -            -            1.4
 Discontinued operations                   3.8          5.5           1.8
Identifiable assets:
 Federal                                $ 42.4       $ 29.8        $ 27.4
 Commercial                                 -           3.0          12.0
 Discontinued operations                  39.5         42.8            -
 General corporate assets                  9.7          7.8           5.9
                                        ------      -------        ------
                                        $ 91.6      $  83.4        $ 45.3
                                        ======      =======        ======
</TABLE>

The  operating  profit  in 1996  for  the  Federal  operating
segment was adversely impacted  by  a $2.6 million adjustment
to the profitability of the General Services Administration -
Eastern Zone contract. Other expenses  in  1996  include $0.9
million  related to an unsuccessful initial public  offering.
Other  expenses   in   1997   include   $2.9  million  for  a
supplemental ESOP contribution.












                              F-27




                         Schedule II


                    CTA INCORPORATED
         Valuation and Qualifying Accounts and Reserves
                         ($000)

               ALLOWANCE FOR DOUBTFUL ACCOUNTS

<TABLE>
<CAPTION>

                   Balance,  Charged to
                  Beginning    Costs    Charged to                 Balance,
                     of         and       Other                    End of
DESCRIPTION        Period     Expenses   Accounts  Deductions      Period

<S>                <C>          <C>        <C>        <C>          <C>
For the year ended
December 31, 1995  $3,690       $200       $292       $1,482       $2,700

For the year ended
December 31, 1996  $2,700       $300       $108       $  0         $3,108

For the year ended
December 31, 1997  $3,108       $600       $ 94       $  334       $3,468

</TABLE>







                              F-28
<PAGE>


          CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS





     We  consent  to  the incorporation by reference  in  the
Registration Statement  (Form S-8 No. 33-71128) pertaining to
the  Defined  Contribution  401(k)  Retirement  Plan  of  CTA
INCORPORATED and  in  the  related  prospectus  of our report
dated  February  28,  1998,  with respect to the consolidated
financial  statements  of CTA INCORPORATED  included  in  the
Annual Report (Form 10-K)  for  the  year  ended December 31,
1997.

                                   /s/Ernst & Young LLP

Washington, D.C.
March 26, 1998






CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS





     We  consent  to  the incorporation by reference  in  the
Registration Statement  (Form S-8 No. 33-71128) pertaining to
the  Defined  Contribution  401(k)  Retirement  Plan  of  CTA
INCORPORATED and  in  the  related  prospectus  of our report
dated  February  28,  1998,  with respect to the consolidated
financial  statements  of CTA INCORPORATED  included  in  the
Annual Report (Form 10-K)  for  the  year  ended December 31,
1997.

                                   /s/Ernst & Young LLP

Washington, D.C.
March 26, 1998







                              F-29

<PAGE>

CONSENT OF LEGG MASON WOOD WALKER, INC., INDEPENDENT
APPRAISERS





     We  consent  to  the incorporation by reference  in  the
Registration Statement  (Form S-8 No. 33-71128) pertaining to
the  Defined  Contribution  401(k)  Retirement  Plan  of  CTA
INCORPORATED and  in  the  related  prospectus  of our report
dated  February  28,  1998,  with respect to the fair  market
value  of  minority  holdings  of   Common   Stock   of   CTA
INCORPORATED  as  of December 31, 1997 included in the Annual
Report (Form 10-K) for the year ended December 31, 1997.

                              /s/Legg Mason Wood Walker, Inc.

Baltimore, MD
March 26, 1998






                              F-30
<PAGE>
REPORT OF LEGG MASON WOOD WALKER, INC., INDEPENDENT
APPRAISERS





Board of Directors
CTA INCORPORATED
6116 Executive Boulevard
Suite 800
Rockville, Maryland  20852


Members of the Board:

     You have requested our opinion (the "Opinion") as to the
fair market value of minority holdings of Common Stock of CTA
INCORPORATED ("CTA"  or  the  "Company")  as  of December 31,
1997.   We  understand  that the Company intends to  use  the
Opinion for the purpose of  contributing  common  stock to an
employee stock plan.

     In rendering our Opinion we have, among other things:

     (i)  reviewed  the audited financial statements  of  CTA
          for each of  the five years ended December 31, 1993
          through December 31, 1997;

     (ii) reviewed certain  other information relating to the
          business, earnings, cash flow, assets and prospects
          of the Company;

     (iii)reviewed  contract  backlog   data   and   contract
          profiles prepared by management;

     (iv) reviewed   certain  data  regarding  the  financial
          performance and market valuation of selected public
          companies we  deemed  to  be  engaged in operations
          similar to those of CTA;

     (v)  reviewed  data  relating  to  recent   merger   and
          acquisition    activity    in   relevant   industry
          classifications; and

     (vi) met with senior management of  CTA  to  discuss the
          operating performance and future prospects  of  the
          Company.

     We  have  relied  without  independent  verification  on
information   supplied  to  us  by  CTA  and  its  employees,
representatives and independent public accountants as well as
information  available   from   generally  recognized  public
sources

                              F-31

and,  accordingly,  do  not  assume  responsibility  for  the
accuracy or completeness of such information.   Additionally,
we  have  not  made  an appraisal of any assets of CTA.   Our
Opinion  herein  is necessarily  based  upon  conditions  and
circumstances as they  exist,  have  been disclosed to us and
can be evaluated as of the date hereof.

     In recommending a 17.5% Discount Factor for the minority
holdings of CTA Common Stock we note that  while  there is no
active  trading market for the Common Stock, there have  been
limited treasury stock purchases by the Company, its Employee
Stock Option Plan and employees of CTA.

     Based  upon  our analysis of the foregoing and upon such
other data as we have considered relevant to our analysis, it
is  our  Opinion that  the  fair  market  value  of  minority
holdings of  CTA  Common  Stock falls in a range of $4.29 per
share to $5.82 per share as  of  December  31,  1997, with an
expected value of $5.05 per share.  It should be  noted  that
this  valuation  reflects the 2 for 1 Common Stock split that
became effective February 2, 1998.


                         Very truly yours,

                         LEGG MASON WOOD WALKER, INCORPORATED

Baltimore, MD
February 28, 1998

                         By:/S/SCOTT R. COUSINO

                              Scott R. Cousino
                              Managing Director


















                              F-32
<PAGE>

                         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.


                                   CTA INCORPORATED


Date: March 31, 1998               By:/S/ C.E. VELEZ
                                   C.E. Velez
                                   Chairman of the Board
                                   and Chief Executive
Officer


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



By:/S/ C.E. VELEZ
C.E. Velez
Chairman of the Board, President,
 Chief Executive Officer and Director   Date: March 31, 1998


By:/S/ GREGORY H. WAGNER
Gregory H. Wagner
Executive Vice President, Chief
 Financial Officer, Principal
 Accounting Officer and Treasurer       Date: March 31, 1998


By:/S/ HARVEY D. KUSHNER
Harvey D. Kushner
Director                                Date: March 31, 1998


By:/S/ DAVID R. MACKIE
David R. Mackie
Director                                Date: March 31, 1998


By:/S/ RAYMOND V. MCMILLAN
Raymond V. McMillan
Director                                Date: March 31, 1998



By:/S/ GEORGE W. MORGANTHALER
George W. Morganthaler
Director                                Date: March 31, 1998


By:/S/ JAMES M. PAPADA, III
James M. Papada, III
Director                                Date: March 31, 1998


By:/S/ ARTURO SILVESTRINI
Arturo Silvestrini
Director                                Date: March 31, 1998


By:/S/ GREGORY H. WAGNER
Gregory H. Wagner
As Attorney-in-Fact                     Date: March 31, 1998