8-K

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549


                            FORM 8-K

                         CURRENT REPORT


                PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 16, 1998


               STEWART & STEVENSON SERVICES, INC.
     (Exact name of registrant as specified in its charter)


          Texas                       0-8493              74-1051605
(State or other jurisdiction   (Commission File Number)   (I.R.S. Employer
      of incorporation)                                   Identification No.)


    2707 North Loop West
       Houston, Texas                                          77008
(Address of principal executive offices)                     (Zip code)


    Registrant's telephone number, including area code: (713) 868-7700


Item 5.   Other Events.

On October 16, 1998, Stewart & Stevenson Services, Inc. (the
"Company") issued the press release attached hereto as Exhibit
99.1 announcing that it has been awarded a second multiyear
contract to produce 2.5 and five ton trucks for the U.S. Army.


Item 7.  Exhibits.

Exhibit 99.1   Company Press Release dated October 16, 1998
               titled "Stewart & Stevenson Receives Second Award
               for U.S. Army Family of Medium Tactical
               Vehicles (FMTV) Trucks."


                           SIGNATURES

     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.

                               STEWART & STEVENSON SERVICES, INC.



Date: October 16, 1998

                                /s/   Robert L. Hargrave
                               By:___________________________
                               Name:  Robert L. Hargrave
                               Title: President and Chief Executive Officer



                          EXHIBIT INDEX
                                
99.1 Company Press Release dated October 16, 1998 titled "Stewart
     & Stevenson Receives Second Award for U.S. Army  Family  of
     Medium Tactical Vehicles (FMTV) Trucks. "

__________________

EX-99.1

News From:


Stewart & Stevenson
Corporate Headquarters
P.O. Box 1637
Houston, TX  77251-1637
 
 
 

FOR IMMEDIATE RELEASE:


      STEWART & STEVENSON RECEIVES SECOND AWARD FOR US ARMY
         FAMILY OF MEDIUM TACTICAL VEHICLES (FMTV) TRUCKS
                                
                                
                                
Houston, TX - October 16, 1998 - STEWART & STEVENSON SERVICES,
INC. (NASDAQ:SSSS), a leading manufacturer and distributor of
industrial and energy related equipment, announced the award of a
second multiyear contract to produce 2.5 and five ton trucks for
the U.S. Army.   The new contract valued at more than $1.4
billion  provides for the production, through 2003, of approximately 
9,000  trucks and 1,500 trailers, under a four year fixed, plus one 
option year contract.

"Stewart & Stevenson is proud to announce award of the next FMTV
contract not only because it provides our Tactical Vehicle
Systems division with stable long-term production but also
because it represents months of hard work and commitment on the
part of the Army, Stewart & Stevenson and FMTV suppliers to
guarantee our soldiers have the world's most capable tactical
truck," said Robert L. Hargrave, Stewart & Stevenson's Chief
Executive Officer.

Award of the rebuy contract follows an extensive test
program on the FMTV powertrain during which six vehicles were
driven for a total of 72,000 miles in demanding on-road and off-
road conditions.  Working in partnership with the Army FMTV
Program Management office and the FMTV Industry Team, Stewart &
Stevenson will upgrade existing and new production FMTVs with a
new flywheel housing and driveshaft to improve on-highway
reliability.  Other improvements on the new truck (A1 model)
include an environmentally compliant engine, enhanced
transmission, antilock brakes and a new electronic databus.

The A1 Model FMTV will undergo Production Verification Tests
scheduled to begin in November 1998 and complete by May 1999.
Immediately following completion of testing, Stewart & Stevenson
will receive full production release.

Tactical Vehicle Systems Senior Vice President, C. LaRoy
Hammer said: "The FMTV is the most rigorously tested truck in
the history of the U.S. military.  The truck has proven to be
effective and reliable in every mission profile."

The FMTV is the backbone for tactical maneuver and logistics
from platoon through division level in all units, performing more
than 55 percent of the Army's local and line haul mobility and
resupply missions.  The 2.5-ton version is available in cargo and
van versions and the 5-ton truck comes in cargo, dump, tanker,
long haul tractor, wrecker and material handling variants.  The
FMTV trailer complements most variants.

The U.S. Army's total FMTV requirement  is approximately
85,000 trucks.  Stewart & Stevenson currently is producing the
last of 10,843 trucks under the first FMTV multiyear contract
awarded in 1991 for $1.2 billion.



Contact: David R. Stewart, Treasurer
Phone:   713-868-7657
Fax:     713-863-1519
HTTP:    //www.ssss.com



This report contains forward-looking information.  The forward-
looking statements, including without limitation statements
relating to the Company's performance and industry conditions for
the year, are made pursuant to the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995.  These forward-
looking statements may be significantly impacted by various
factors described herein and in the Company's Annual Report and
Form 10-K filed with the Securities and Exchange Commission for
the year ended January 31, 1998.  There can be no assurance that
anticipated developments will occur.