UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

      FOR THE QUARTER ENDED:                            COMMISSION FILE NUMBER:
        September 30, 1999                                      333-36447

                            FEDERAL DATA CORPORATION
             (Exact name of Registrant as specified in its charter)

             DELAWARE                                    52-0940566
 (State or other jurisdiction of              (I.R.S. Employer Identification
          incorporation)                                Number)

                      4800 HAMPDEN LANE, BETHESDA, MD 20814
               (Address of principal executive offices) (Zip Code)

                                 (301) 986-0800
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
            (Former name, former address, and former fiscal year, if
                           changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                  Yes [X] No [  ]

As of the close of business  October 29, 1999, the  registrant  had  outstanding
2,932,196 shares of common stock, par value $.01 per share.

<PAGE>

INDEX

                                                                           Page

Part I.  Financial Information

    Item 1.  Consolidated Financial Statements.

             Consolidated Balance Sheets as of December 31, 1998
             and September 30, 1999 (Unaudited)................................3

             Consolidated Statements of Operations for the Three Months
             Ended September 30, 1998 and 1999 (Unaudited) and the Nine Months
             Ended September 30, 1998 and 1999 (Unaudited).....................4

             Consolidated Statements of Cash Flows for the Nine Months Ended
             September 30, 1998 and 1999 (Unaudited)...........................5

             Notes to Consolidated Financial Statements (Unaudited)............6

    Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations.........................................7

    Item 3.  Quantitative and Qualitative Disclosure about Market Risk........12

Part II.  Other Information

    Item 6.  Exhibits and Reports on Form 8-K.................................13

                                       2

<PAGE>

Part I. Financial Information

Item 1.  Consolidated Financial Statements.

                            FEDERAL DATA CORPORATION
                           Consolidated Balance Sheets
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                  December 31,  September 30,
                                                                     1998           1999

                                                                  -----------   ------------
                                                                                (Unaudited)
<S>                                                              <C>            <C>
Assets

     Cash and cash equivalents....................................    $3,942        $13,869
     Accounts receivable..........................................   126,840        127,490
     Net investment in sales-type leases..........................     5,221          5,161
     Inventory....................................................       963          4,430
     Other assets.................................................     8,156          3,520
                                                                  -----------   ------------
          Total current assets....................................   145,122        154,470

     Net investment in sales-type leases..........................     2,997          2,451
     Leased and other property and equipment......................     5,120          5,589
     Goodwill and intangibles.....................................    69,411         61,840
     Other assets.................................................     9,271          9,702
                                                                  -----------   ------------
          Total assets............................................  $231,921       $234,052
                                                                  ===========   ============

Liabilities and stockholders' deficit

     Accounts payable and other liabilities.......................   $87,846        $89,687
     Nonrecourse obligations under capital leases.................     2,232          2,156
                                                                  -----------   ------------
          Total current liabilities...............................    90,078         91,843

     Recourse notes payable.......................................   141,000        146,400
     Nonrecourse obligations under capital leases.................     1,551              -
     Other liabilities............................................     2,464          2,207
                                                                  -----------   ------------
          Total liabilities.......................................   235,093        240,450
                                                                  -----------   ------------

     Stockholders' deficit

     Common stock, $.01 par value: 8,000,000 shares authorized;
         shares issued and outstanding, 2,927,521 in 1998
         and 2,932,196 in 1999....................................        29             29
     Capital in excess of par value...............................    42,807         44,221
     Accumulated deficit..........................................   (46,008)       (50,648)
                                                                  -----------   ------------
          Total stockholders' deficit.............................    (3,172)        (6,398)
                                                                  -----------   ------------
Commitments and contingencies

          Total liabilities and stockholders' deficit.............  $231,921       $234,052
                                                                  ===========   ============

</TABLE>

                             See notes to consolidated financial statements.

                                       3

<PAGE>

                            FEDERAL DATA CORPORATION
                      Consolidated Statements of Operations
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                          Three Months Ended         Nine Months Ended
                                                             September 30,             September 30,
                                                        ------------------------  ------------------------
                                                           1998         1999         1998         1999
                                                        -----------  -----------  -----------  -----------
<S>                                                     <C>          <C>          <C>          <C>
Revenue

     Product sales......................................  $100,884     $112,048     $236,303     $283,715
     Professional and support services..................    43,502       43,068      127,010      126,083
     Interest and other.................................       683          774        1,660        1,508
                                                        -----------  -----------  -----------  -----------
          Total revenue.................................   145,069      155,890      364,973      411,306
                                                        -----------  -----------  -----------  -----------
Expenses

     Cost of sales and services.........................   127,878      135,399      316,095      358,403
     Selling, general and administrative................    11,037       12,728       34,812       38,315
     Goodwill and intangibles...........................     2,920        2,554        7,893        7,679
     Interest...........................................     4,223        4,091       11,936       11,975
                                                        -----------  -----------  -----------  -----------
          Total expenses................................   146,058      154,772      370,736      416,372
                                                        -----------  -----------  -----------  -----------

(Loss) income before income tax provision (benefit).....      (989)       1,118       (5,763)      (5,066)

Income tax provision (benefit)..........................       850          889          556         (426)
                                                        -----------  -----------  -----------  -----------

Net (loss) income.......................................   ($1,839)        $229      ($6,319)     ($4,640)
                                                        ===========  ===========  ===========  ===========

</TABLE>

                         See notes to consolidated financial statements.

                                       4

<PAGE>

                            FEDERAL DATA CORPORATION
                      Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            Nine Months Ended
                                                              September 30,
                                                            1998        1999
                                                        -----------  -----------
<S>                                                     <C>          <C>
Cash flows from operating activities:

    Net loss............................................   ($6,319)     ($4,640)
    Adjustments to reconcile net loss to net cash flows
         from operating activities:

    Depreciation and amortization.......................     9,932        9,452
    Non-cash compensation related to stock options......     1,740        1,405
    Amortization of deferred financing costs............       712          712
    Gain on sale of assets..............................         -         (125)
    Income recorded on sales-type leases................      (333)        (858)
    Collections from sales-type leases..................     3,084        6,133
    Increase in accounts receivable.....................   (16,701)        (650)
    Decrease (increase) in inventory....................       808       (3,467)
    Increase in accounts payable and accrued expenses...     8,138        1,572
    Net change in other assets and liabilities..........    (1,552)       3,464
                                                        -----------  -----------
      Net cash flows from operating activities..........      (491)      12,998
                                                        -----------  -----------
Cash flows from investing activities:

    Acquisitions of businesses, net of cash received....   (30,641)         (68)
    Net proceeds from sale of property and equipment....         -          488
    Purchase of equipment for sales-type leases.........    (2,022)      (4,476)
    Purchase of property and equipment..................    (1,819)      (2,604)
                                                        -----------  -----------
    Net cash flows from investing activities............   (34,482)      (6,660)
                                                        -----------  -----------
Cash flows from financing activities:

    Repayments of borrowings............................      (551)           -
    Net borrowings under line of credit.................    31,571        5,400
    Proceeds from sale of common stock..................       449            9
    Repayments of capital lease obligations.............      (854)      (1,820)
                                                        -----------  -----------
    Net cash flows from financing activities............    30,615        3,589
                                                        -----------  -----------

Net change in cash and cash equivalents.................    (4,358)       9,927

Cash and cash equivalents, beginning of period..........     6,327        3,942
                                                        -----------  -----------
Cash and cash equivalents, end of period................    $1,969      $13,869
                                                        ===========  ===========

</TABLE>

                 See notes to consolidated financial statements.

                                       5

<PAGE>

                            Federal Data Corporation
                   Notes to Consolidated Financial Statements
                        (In thousands, except share data)
                                   (Unaudited)

Note 1 - Basis of Presentation

The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts  of  Federal  Data  Corporation  and  its   wholly-owned   subsidiaries
(collectively,  the  Company) and have been  prepared  pursuant to the rules and
regulations of the Securities and Exchange  Commission.  Certain information and
note disclosures normally included in the annual financial statements,  prepared
in accordance with generally accepted accounting principles, have been condensed
or  omitted  pursuant  to those  rules and  regulations,  although  the  Company
believes  that  the  disclosures  made  are  adequate  to make  the  information
presented not misleading.

In the opinion of management,  the accompanying unaudited consolidated financial
statements reflect all necessary adjustments and reclassifications (all of which
are of a normal,  recurring nature) that are necessary for fair presentation for
the  periods  presented.  It is  suggested  that  these  unaudited  consolidated
financial  statements be read in  conjunction  with the  consolidated  financial
statements and the notes thereto  included in the Company's latest annual report
to the  Securities  and Exchange  Commission on Form 10-K 405 for the year ended
December 31, 1998.

The results of operations  for the three months and nine months ended  September
30, 1999, are not  necessarily  indicative of the results to be expected for the
full fiscal year ending December 31, 1999.

All of the Company's direct and indirect  wholly-owned  subsidiaries  have fully
and  unconditionally  guaranteed,  on a joint and several  basis,  the Company's
obligations  under its  Senior  Subordinated  Notes.  The  Company  is a holding
company  with  no  assets  or  operations  other  than  its  investments  in its
subsidiaries. The separate financial statements of the subsidiary guarantors are
not presented  because the  Company's  management  believes that such  financial
statements are not material to investors.

Certain  amounts  have been  reclassified  in prior  periods  to  conform to the
current period presentation. These reclassifications had no effect on net (loss)
income or accumulated deficit as previously reported.

Note 2 - Stockholders' Equity

In December 1995, FDC Holdings,  Inc.  merged with and into the Company with the
Company continuing as the surviving corporation. The merger was accounted for as
a recapitalization which resulted in a charge to stockholders' equity of $58,795
to  reflect  the  redemption  of common  stock.  In  accordance  with the merger
agreement,  the Company was to replace  options  previously  outstanding  at the
merger date with options in the surviving corporation that provide substantially
the same economic benefit to the option holder as the benefits provided prior to
the merger. To fulfill this obligation,  in March 1999, the Company issued fully
vested  options to purchase  40,425 shares of the  Company's  common stock at an
exercise price of $2.00 per share.  These options expire ten years from the date
of grant. Accordingly,  the Company recorded non-cash compensation of $1,011 and
a related  increase  in capital in excess of par value  based on the  difference
between the  exercise  price of the stock  options  and the current  fair market
value.  In June 1999,  options to purchase 4,675 shares of the Company's  common
stock were exercised at $2.00 per share.

                                       6

<PAGE>

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

ACQUISITIONS

In February and March 1998, the Company purchased all of the outstanding  common
stock of R.O.W. Sciences, Inc. (R.O.W.) and Technical and Management Assistance,
Inc.  (TMA) and also in  February  1998,  purchased  all of the  assets of Telos
Corporation's  Telos  Information  Systems  Division (TIS),  (collectively,  the
Acquisitions).  The  aggregate  purchase  price of the  Acquisitions  was  $33.6
million.  The purchase price consisted of $31.6 million in cash and $2.0 million
in subordinated  notes. The agreements also provide for additional cash payments
up to $0.4 million if certain revenue objectives are met. Such payments, if any,
will be accounted for as adjustments to the purchase price.  Except as expressly
indicated,  the following discussion does not give effect to the pre-acquisition
operations of R.O.W., TMA and TIS, or include pro forma financial information.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1998

REVENUE

Revenue for the three months ended  September  30, 1999 was $155.9  million,  up
$10.8  million or 7% over the  comparable  period of 1998.  Revenue from product
sales was $112.0 million,  up $11.2 million or 11% over the comparable period of
1998.  The increase in revenue from product  sales is primarily due to increased
volume as a result of repeat  customer  business,  partner  referrals,  outbound
solicitation  and electronic  commerce.  Revenue from  professional  and support
services was $43.1 million,  down $0.4 million or 1% over the comparable  period
of 1998.

COST OF SALES AND SERVICES

Cost of sales and services for the three  months  ended  September  30, 1999 was
$135.4 million,  up $7.5 million or 6% over the comparable  period of 1998. Cost
of sales and  services for the three  months  ended  September  30, 1999 was 87%
compared  with 89% of sales and services  revenue for the  comparable  period of
1998.  The increase in gross margin  percentage  was  primarily  due to improved
margins on recently awarded professional and support services contracts.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Selling, general and administrative expense for the three months ended September
30, 1999 was $12.7 million, up $1.7 million or 15% over the comparable period of
1998. The increase in selling,  general and administrative expense was primarily
related  to  increased  personnel  engaged  in sales and  marketing  activities,
increased  sales   commissions,   and  training   related  to  network  services
activities.  Selling,  general and  administrative  expense for the three months
ended September 30, 1999 was 8% of revenue which was not significantly different
from the comparable period of 1998.

AMORTIZATION OF GOODWILL AND INTANGIBLES

The excess of the cost of acquisitions  over the fair value of identifiable  net
tangible and intangible assets acquired was $64.5 million and is being amortized
on a straight-line  basis over fifteen years.  The present value of the contract
profits of $16.5 million  acquired in  acquisitions  is being amortized over the
remaining  terms of the  acquired  contracts in relation to the  recognition  of
related contract revenue.  Other identified  intangibles including covenants not
to compete,  work force and trade names and trademarks of $5.5 million  acquired
in acquisitions are being amortized over periods up to three years. Amortization
of goodwill and  intangibles  for the three months ended  September 30, 1999 was
$2.6 million,  down $0.4  million,  or 13% over the  comparable  period of 1998,
primarily  due to the  amortization  of the value  assigned  to trade  names and
trademarks which was fully amortized by March 31, 1999.

                                       7

<PAGE>

INTEREST EXPENSE

Interest expense for the three months ended September 30, 1999 was $4.1 million,
down $0.1 million,  or 3% over the  comparable  period of 1998 due to an overall
reduction in the average daily borrowings  under the Company's  revolving credit
facility.

INCOME TAX PROVISION

The income tax provision for the three months ended  September 30, 1999 is based
on an estimated  annual  effective rate,  excluding  expenses not deductible for
income  tax  purposes.  Before  giving  effect to the  non-deductibility  of the
amortization of goodwill and intangibles  associated with certain  acquisitions,
the  effective  tax  provision  rate for the year  ending  December  31, 1999 is
estimated  to be 40%,  approximately  the same rate  recorded  during  the three
months ended September 30, 1998.

NET INCOME/LOSS

Net income for the three months ended  September  30, 1999 was $0.2  million,  a
$2.0  million  increase  from  the  net  loss of $1.8  million  recorded  in the
comparable period of 1998 based on the factors discussed above.

RESULTS OF OPERATIONS

NINE MONTHS ENDED  SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1998

REVENUE

Revenue for the nine months  ended  September  30, 1999 was $411.3  million,  up
$46.3  million  or 13% over the  comparable  period  of 1998.  The  Acquisitions
accounted for $9.7 million of the increase in revenue over the comparable period
of 1998. Revenue from product sales was $283.7 million,  up $47.4 million or 20%
over the  comparable  period of 1998. The increase in revenue from product sales
is primarily due to increased  volume as a result of repeat  customer  business,
partner referrals,  outbound solicitation and electronic commerce.  Revenue from
professional and support services was $126.1 million, down $0.9 million from the
comparable   period  of  1998.   Excluding  the  effect  of  the   Acquisitions,
professional  and support services revenue was down $10.6 million or 8% over the
comparable  period of 1998. This reduction in professional  and support services
revenue was primarily due to the expiration of existing  contracts.  The largest
contract  that  expired  during the nine months ended  September  30, 1998 was a
contract  awarded to NYMA,  Inc.  (NYMA) in 1993 under section 8(a) of the Small
Business Act, which is intended to foster growth of small  businesses  owned and
controlled by socially and  economically  disadvantaged  individuals.  After the
acquisition of NYMA by the Company in May 1997,  NYMA's continued  participation
as a prime  contractor  required a waiver  from the  Administrator  of the Small
Business  Administration  which was not received.  The reduction in professional
and support  services  revenue was partially  offset by professional and support
services  revenue of $9.7 million related to the  Acquisitions  and revenue from
recently awarded professional and support services contracts.

COST OF SALES AND SERVICES

Cost of sales and  services  for the nine months  ended  September  30, 1999 was
$358.4 million,  up $42.3 million or 13% over the comparable period of 1998. The
Acquisitions  accounted  for $8.1  million of the  increase in cost of sales and
services over the comparable  period of 1998. Cost of sales and services for the
nine months ended September 30, 1999 was 88% of sales and services revenue which
was not significantly different from the comparable period of 1998.

                                       8

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Selling,  general and administrative expense for the nine months ended September
30, 1999 was $38.3 million, up $3.5 million or 10% over the comparable period of
1998.  The  Acquisitions  accounted for $0.8 million of the increase in selling,
general and  administrative  expense over the comparable  period of 1998. During
the nine months ended September 30, 1998, the Company  modified its Stock Option
Plan for  Executive  and Other Key  Employees  by  accelerating  the  vesting of
certain  performance  options.  During the nine months ended September 30, 1999,
the Company  issued stock options in accordance  with the Company's  1995 merger
agreement with FDC Holdings,  Inc.  Accordingly,  the Company recorded  non-cash
compensation  of $1.7  million and $1.4  million  during the nine  months  ended
September 30, 1998 and 1999, respectively,  and a related increase in capital in
excess of par value based on the  difference  between the exercise  price of the
stock  options and the current fair market  value.  Excluding  the effect of the
Acquisitions and the non-cash compensation,  selling, general and administrative
expense for the nine months ended  September  30, 1999 was 9% of revenue,  which
was not significantly different from the comparable period of 1998.

AMORTIZATION OF GOODWILL AND INTANGIBLES

The excess of the cost of acquisitions  over the fair value of identifiable  net
tangible and intangible assets acquired was $64.5 million and is being amortized
on a straight-line  basis over fifteen years.  The present value of the contract
profits of $16.5 million  acquired in  acquisitions  is being amortized over the
remaining  terms of the  acquired  contracts in relation to the  recognition  of
related contract revenue.  Other identified  intangibles including covenants not
to compete,  work force and trade names and trademarks of $5.5 million  acquired
in acquisitions are being amortized over periods up to three years. Amortization
of goodwill and  intangibles  for the nine months ended  September  30, 1999 was
$7.7  million,  down $0.2  million,  or 3% over the  comparable  period of 1998,
primarily  due to the  amortization  of the value of trade names and  trademarks
which was fully amortized by March 31, 1999.

INTEREST EXPENSE

Interest  expense for the nine months ended September 30, 1999 was $12.0 million
which was not significantly different from the comparable period of 1998.

INCOME TAX PROVISION/BENEFIT

The income tax benefit for the nine months ended  September 30, 1999 is based on
an estimated annual effective rate, excluding expenses not deductible for income
tax purposes.  Before giving effect to the non-deductibility of the amortization
of  goodwill  and  intangibles  associated  with  certain  acquisitions  and the
non-cash  compensation  related to the  accelerated  vesting of stock options in
1998, the effective tax provision rate for the year ending  December 31, 1999 is
estimated to be 40%, approximately the same rate recorded during the nine months
ended September 30, 1998.

NET LOSS

Net loss for the nine months ended  September 30, 1999 was $4.6 million,  a $1.7
million  decrease from the net loss of $6.3 million  recorded in the  comparable
period of 1998 based on the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  primary  source of liquidity is cash  provided by operations  and
financing  activities.  In general,  the Company's  liquidity  requirements vary
seasonally with revenue,  which are historically  higher in the third and fourth
quarters  of each  fiscal  year.  Cash  flow  from the  collection  of  accounts
receivable  from  the  U.S.  Government  (the  Government)  has  generally  been
predictable  and  dependable.  Cash and cash  equivalents  were $13.9 million at
September 30, 1999, up $9.9 million from December 31, 1998 primarily as a result
of net cash  generated in  operating  activities  of $13.0  million and net cash
generated in financing activities of $3.6 million being partially offset by cash
used in investing activities of $6.7 million. Net cash

                                       9

<PAGE>

generated in operating  activities  was primarily a result of  depreciation  and
amortization of $9.5 million, collections from sales-type leases of $6.1 million
and the change in other assets and liabilities of $3.5 million, partially offset
by the net loss of $4.6 million and an increase in  inventory  of $3.5  million.
Net cash used in  investing  activities  amounted  to $6.7  million for the nine
months ended September 30, 1999, primarily as a result of purchases of equipment
for  sales-type  leases  totaling  $4.5  million.  Net cash flow from  financing
activities  was $3.6  million  for the nine  months  ended  September  30,  1999
primarily as a result of net  borrowings  under the Company's  revolving  credit
facility of $5.4 million.

In October 1999, the Company  amended its revolving  credit  facility to provide
for a seasonal  increase in the aggregate  amount of borrowings  available under
the  revolving  credit  facility and an  agreement  with an  asset-based  lender
related to inventory  purchases.  The amendment  corresponds  with the Company's
liquidity  requirements,  which are historically  higher in the third and fourth
quarters of each fiscal year.

EBITDA  represents  the sum of loss before income tax provision  (benefit),  net
recourse interest  expense,  depreciation and amortization and one-time non-cash
charges.  EBITDA is not a measure of  performance or financial  condition  under
generally accepted accounting principles, but is presented to provide additional
information related to debt service capability.  EBITDA should not be considered
in isolation or as a substitute for other  measures of financial  performance or
liquidity  under  generally  accepted  accounting  principles.  While  EBITDA is
frequently  used as a measure of operations and the ability to meet debt service
requirements,  it is  not  necessarily  comparable  to  other  similarly  titled
captions of other companies due to the potential  inconsistencies  in the method
of calculation.

The following  presentation  represents the Company's  computation of EBITDA (in
thousands):

<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                              September 30,
                                                        -----------  -----------
                                                            1998        1999
                                                        -----------  -----------
<S>                                                     <C>          <C>
Loss before income tax provision (benefit)..............   ($5,763)     ($5,066)
Net recourse interest expense...........................    11,536       11,664
Non-cash compensation related to stock options..........     1,740        1,405
Depreciation and amortization...........................     9,932        9,452
                                                        -----------  -----------
     EBITDA.............................................   $17,445      $17,455
                                                        ===========  ===========
</TABLE>

YEAR 2000 COMPLIANCE

State of  Readiness:  The  Company  is aware of the issues  associated  with the
programming  code in  existing  computer  systems  as the year 2000  approaches.
Certain  computer  operations will be affected by the roll-over of the two-digit
year value to 00. The issue is whether computer systems will properly  recognize
date-sensitive  information  when the year changes to 2000.  Systems that do not
properly  recognize such  information  could generate  erroneous data or cause a
system to fail.

In order to attempt to identify and remediate any material Year 2000 issues that
may affect the Company, the Company has formed a Year 2000 Readiness Team led by
the Vice  Presidents  of its operating  divisions  and supported by  appropriate
contracts and technical resources  throughout the Company.  The Readiness Team's
plan addresses internal systems and processes, critical suppliers and customers.
A Year 2000  analysis of the  Company's  core  software and hardware  systems is
underway, focusing on the most critical systems first. This process includes the
following  steps:  inventory,   classification  of  criticality,  assessment  of
compliance,  remediation and testing. This process is complete for the Company's
critical  systems.  The Company  estimates that this effort is approximately 95%
complete for its  non-critical  systems.  The expected  completion  date for the
remaining  non-critical  systems is November 30, 1999. All of the Company's core
administrative  systems,  including  payroll,  human  resources,  operations and
finance, are  commercial off-the-shelf  products that are  Year  2000 compliant.
Although the Company has completed

                                       10

<PAGE>

assessments of  core administrative  systems  and assets with embedded  systems,
assessments  will be ongoing in  order to make  sure new assets  and systems are
compliant.

The Company has assessed the  potential  for Year 2000 issues with third parties
with whom the Company has a material  relationship.  The Company believes,  as a
result  of this  assessment,  that  Year 2000  issues  will not have a  material
adverse  effect on the Company's  business or results of  operations  due to the
Company's  relationship  with these third parties.  The Company will continue to
contact new  suppliers  with whom the  Company may have a material  relationship
regarding  such  suppliers'  potential  Year 2000  issues.  The Company has made
reasonable  efforts  to  incorporate  the Year 2000  requirements  and  warranty
provisions of its customer  contracts into its material supply  agreements so as
to  achieve  "back-to-back"  warranties  from its  suppliers.  However,  in some
instances the customer's requirement may vary from a supplier's commercial terms
relative to the Year 2000. In the event that any key supplier's products are not
found to be Year 2000 compliant,  the end-user customer will be so notified, and
the  Company  will work with such  customer  to  identify a Year 2000  compliant
alternative.  Despite such efforts,  the Company  expects to have only a limited
understanding of the potential Year 2000  shortcomings of many of its suppliers,
and  will  therefore  be  uncertain  as to the full  nature  and  extent  of the
potential  supplier-derived  impact on the Company.  Should  supplier  Year 2000
issues arise,  such issues could  interrupt the flow of products and services to
the Company,  which could in turn impact the Company's timely delivery under its
customer contracts.

Costs to Address  the  Company's  Year 2000  Issues:  The  Company is  incurring
internal staff costs as well as certain consulting expenses and product costs to
examine and address its Year 2000 readiness.  The Company estimates that it will
incur  approximately $900,000  to remediate any  material  Year 2000 issues,  of
which  approximately  $775,000  has  been  incurred  through September 30, 1999.
Management  does  not  believe  that future  project costs will  have a material
adverse  effect on the Company's business or results of operations. Maintenance,
modification costs and software purchased with the express purpose of fixing the
Year  2000 issue will be expensed  as incurred in  accordance with  the Emerging
Issues Task Force of  the  Financial Accounting Standards Board Issue No. 96-14,
"Accounting for the  Costs Associated  with Modifying  Computer Software for the
Year 2000". Network components that may have Year 2000 compliance issues such as
workstations, printers and network components are being systematically repaired
or  replaced  as  part  of  the  normal  information  technology  infrastructure
replacement  strategy.  The  annual  expenditures for  these  components are not
significantly  above  levels  that  the Company has historically incurred in the
normal course of business. The Company's  Year 2000 program is an ongoing effort
and the  estimated  costs and completion  dates set forth  herein are subject to
change.  The  Company  cannot assure that these  estimates will prove  accurate.
Specific  factors that  could cause  material  differences include, but  are not
limited  to,  the  availability  and  cost of  personnel  skilled  in  Year 2000
remediation,  the ability to identify, assess,  remediate  and test all relevant
computer codes, third party remediation plans and similar uncertainties.

Risks of the Company's Year 2000 Issues: Due to the varying degrees of Year 2000
readiness of the Government  agencies with whom the Company does  business,  the
Company  is  unable  to  estimate  the  possible  impact of the Year 2000 on its
customers'  operations or buying  patterns.  While such agencies have  indicated
that they are working to resolve their Year 2000 problems,  the Company  regards
their  ability to achieve this  objective as  uncertain.  Because the  Company's
understanding  of the ways in which the Government  could  experience  Year 2000
difficulties  is  inherently  limited,  the Company is  uncertain as to the full
nature and extent of the  potential  Government-derived  Year 2000 impact on the
Company.  However,  the Company is concerned  that Year 2000 problems  affecting
Government  financial  administration  functions  could  interrupt  or delay the
orderly flow of payments to the Company under its Government contracts.  Because
of the Company's substantial debt service obligations and reliance on Government
contracts,  any such  interruption  or delay could severely impact the Company's
financial condition.

The Company continues to receive requests for certifications, representations or
other commentary  regarding Year 2000 issues from its customers.  In some cases,
such requests have resulted in contract modifications regarding statements about
the Year 2000 compliance of the products delivered by the Company.  In addition,
the Federal  Acquisition  Regulations  requires that each contract  entered into
with the Government  after October 21, 1997 incorporate by reference a provision
of the Federal  Acquisition  Regulations  which  requires  that all  information
technology acquired by Government agencies be Year 2000

                                       11

<PAGE>

compliant.  There can be no assurance  that  the Company  will not be  adversely
affected  if its  customers enforced  Year  2000  requirements  contained in the
Company's  prime  contracts,  whether  through   incorporation  of  the  Federal
Acquisition  Regulations  or otherwise, which  are found to be inconsistent with
the  Company's suppliers' commitments with respect  to Year 2000  compliance  or
warranty  or  which are  related  to  products delivered, or services performed,
solely by the Company.

Contingency Plans: The Company is finalizing  appropriate  contingency plans for
items  which are deemed  likely to have a  significant  impact on the  Company's
business operations, if not Year 2000 compliant. The Company intends to complete
such contingency plans by November 30, 1999. Management believes it is expending
appropriate  efforts in  addressing  the Year 2000  issue so that the  Company's
business operations will not be significantly  disrupted.  However, there can be
no assurance that the Company will not incur Year 2000 problems  relating to its
efforts or those  involving its customers or suppliers or that the costs of such
efforts will not be greater than currently estimated. Contingency plans are also
being created to cover the failure of significant  third party service providers
where  feasible.  Plans are in place to verify  that all  critical  systems  are
functioning properly during the weekend of January 1, 2000.

                                       ###

This quarterly report on Form 10-Q contains statements which, to the extent that
they  are  not  recitations  of  historical  fact,  constitute  "forward-looking
statements" that are based on management's expectations,  estimates, projections
and assumptions.  Words such as "expects,"  "anticipates,"  "plans," "believes,"
"estimates,"  variations of such words and similar  expressions  are intended to
identify such  forward-looking  statements that include, but are not limited to,
projections  of future  performance,  assessment of contingent  liabilities  and
expectations   concerning  liquidity,   cash  flow  and  contract  awards.  Such
forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation Reform Act of 1995. These statements are not
guarantees of future  performance  and involve  certain risks and  uncertainties
that are difficult to predict.  Therefore,  actual future results and trends may
differ materially from what is forecast in  forward-looking  statements due to a
variety of factors,  including  the Company's  successful  execution of internal
performance  plans;  performance  issues with key suppliers and  subcontractors;
developments  with  respect  to  contingencies  such  as  legal  proceedings  or
administrative  proceedings  challenging any contract award; labor negotiations;
changing  priorities or  reductions  in the budgets of  Government  agencies who
purchase  products or  services  from the  Company;  termination  of  Government
contracts due to unilateral Government action; and the impact of the "Year 2000"
issue  on  the  Company  and  its  customers  and   suppliers.   For  additional
information,  see "Risk Factors" in the Company's Registration Statement on Form
S-4, SEC File Number 333-36447.

The previous  discussion  and analysis  should be read in  conjunction  with the
financial statements and related notes included elsewhere in this report.

                                       ###

Item 3.  Quantitative and Qualitative Disclosure about Market Risk.

The  Company is exposed to market  risk from  changes in  interest  rates due to
investments in instruments made for non-trading purposes. The interest rate risk
relates  primarily to the  Company's  portfolio of short-term  investment  grade
securities. The Company is also subject to risk relating to fluctuating interest
rates under its Senior Credit Facility.  The Company believes that interest rate
risk is immaterial to the Company.

                                       12
<PAGE>

Part II.  Other Information

Item 6 (a).  Exhibits.

4.15    Amendment to the Senior Credit Facility.

21.1    Subsidiaries of Federal Data Corporation.

27      Financial Data Schedule.

Item 6 (b).  Reports on Form 8-K.

             None.

                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                                   FEDERAL DATA CORPORATION

                                                    /s/ James M. Dean
                                               By:
                                                   -------------------------
                                                     James M. Dean
                                                     Vice President and
                                                       Chief Financial Officer

                                                     Date: November 12, 1999

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