EXHIBIT INDEX

99.1   Company Press Release July 18, 2000,  titled "Stewart & Stevenson
       Tactical Vehicles  Systems, LP Receives $11.8 Million Production
       Contract Modification."

------------------

NEWS FROM:                                              STEWART & STEVENSON
                                                        CORPORATE HEADQUARTERS
                                                        P.O. BOX 1637
                                                        HOUSTON, TX  77251-1637

FOR IMMEDIATE RELEASE:

STEWART & STEVENSON TACTICAL VEHICLES SYSTEMS, LP RECEIVES $11.8 MILLION
PRODUCTION CONTRACT MODIFICATION

     HOUSTON, Texas, July 18, 2000 -- STEWART & STEVENSON SERVICES, INC.
(NASDAQ:SSSS), a leading manufacturer and distributor of industrial and energy
related equipment; oilfield and airline ground support equipment; and a
manufacturer of medium tactical vehicles for the U.S. Army announced that
Stewart & Stevenson Tactical Vehicle Systems, LP, in Sealy, Texas, has been
issued an $11.8 million modification of its Family of Medium Tactical Vehicles
(FMTV) production contract for the U.S. Army.

     The modification, issued by the Army's Tank-automotive and Armament Command
(TACOM), exercises an option for the delivery of 97 two-and-one half ton (LMTV)
cargo trucks and three wreckers in the Production Year 3 (PY3) phase of the
contract. The vehicles will be delivered during the third quarter of 2001.

     The 97 LMTV cargo vehicles will be delivered to the National Guard, while
the three wreckers will be for the U.S. Air Force.

     This new order for 100 vehicles brings the total ordered under the current
production contract to more than 8,000 trucks and almost 1,600 trailers. The
FMTV program has achieved several notable accomplishments recently, including
fielding of the first Model A1 FMTVs, receiving the Army's full material release
approval, and completion of a 22-year accelerated corrosion test program.

This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Stewart & Stevenson believes that its expectations, as
expressed in these statements, are based on reasonable assumptions regarding the
risks and uncertainties inherent in achieving those expectations. These
statements are not, however, guarantees of future performance and actual results
may differ materially. The most important factors that may cause actual results
to differ from our expectations are risk of cancellation, adjustment or
termination of the FMTV procurement program; unilateral changes directed by the
U. S. Army in the scope or timing of the program; future government budgeting,
and changes in applicable laws. Other risk factors are listed in Stewart &
Stevenson Services, Inc. annual report to the Securities and Exchange Commission
on Form 10-K for the year ended January 31, 2000, and Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the three months ended April
29, 2000.

Contact:          Mr. David R. Stewart
                  Treasurer
Phone:            (713) 868-7657
Fax:              (713) 863-1519
Email:            d.stewart@ssss.com
                  HTTP://www.ssss.com