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MAXIMUS

11419 Sunset Hills Road

Reston VA 20190

July 29, 2010

United
States Securities and Exchange Commission

Division of
Corporate Finance — Mail Stop 3010

Washington
DC 20549

Dear
Ms. Monick,

In response
to a telephone call from Howard Efron, we have been asked to provide further
examples of analysts’ reports from fiscal year 2008, focusing on the unusual
and infrequent events which occurred in that year and the charge of $2.2
million disclosed and recorded in the first quarter of that year.

In addition,
we acknowledge that:

·                  The Company
is responsible for the adequacy and accuracy of the disclosure in the filing;

·                  Staff
comments or changes to disclosure in response to staff comments do not
foreclose the Securities and Exchange Commission from taking any action with
respect to the filing;

·                  The Company
may not assert staff comments as a defense in any proceeding initiated by the
Securities and Exchange Commission or any person under the federal securities
laws of the United States.

There were
no significant, unusual events during the first quarter of fiscal year 2008.

However,
during the quarter, the Company did record a pre-tax charge of $2.2 million
($1.3 million after tax) reflecting the correction of an understatement of
stock compensation expense in 2006 and 2007.
As previously noted in our letter of June 18, 2010, this item was
mentioned in our earnings call and was the subject of questions at the time.

Following
the call, reports were prepared by a number of analysts, including the following:

·                  CJS
Securities, whose report is included in Appendix 1.  This report mentions the $2.2 million charge
on page 1, “normalizing” EPS for the effect of the charge.  In addition, there is no evidence that CJS
Securities considered the charge so significant that it affected their
understanding of the Company’s results in any of the years between 2006 and
2008.

1

·                  Jefferies &
Co (Appendix 2).  This report mentions
the charge on page 1 and summarizes it (along with a temporary increase in
tax rates) as “transitory”.  The charge
is excluded in preparing a pro forma calculation of EPS.

·                  UBS and GARP
Research & Securities published reports, but did not mention the
charge.  The GARP report is included at
Appendix 3.

The Company
recorded some legal expenses in the second and third quarter and a gain on sale
of a building in the third quarter.
However, the most significant unusual events occurred in the fourth
quarter, where the Company recorded a $7.5 million pre-tax ($4.6 million
after-tax) goodwill impairment charge and a $37.5 million pre-tax ($23.2
million after-tax) legal and settlement charge related to the settlement with
Accenture over the Texas subcontract.

At the time
of the Company’s initial earnings call on November 13, 2008, the details
of the legal settlement were not known.
However, all analysts’ reports focused either on EBITDA (excluding the
impairment charge) or “pro forma” results with the impairment charge reversed
out.  We believe this is significant
evidence that the analysts are focused on adjusted income.  For example, in Appendix 4 we have included
the report of Stifel Nicolaus.  We note
that:

·                  The report
acknowledges the goodwill impairment charge on page 2;

·                  The report
prepares an analysis of fourth quarter EBIT margin, which excludes goodwill
impairment and legal expenses.

Following
settlement of the Accenture matter, Stifel Nicolaus released a follow-up note
on December 15 ,2008, included as Appendix 5.  This note focuses on the legal and settlement
charge, in itself a reflection of the nature of this charge to the analyst
community.  As well as analyses similar
to those performed in the previous note, this report also includes a section called
“FY08 EPS Restated From Prior Periods” which mentions pro forma EPS of $0.71
for the quarter and $2.83 for the fiscal year.
These pro forma numbers are consistent with those used by the Company in
its press release of December 12, 2008 and include adjustments for legal
and settlement expense, goodwill impairment and the sale of the building.

It remains
our opinion that the error in stock compensation expense is immaterial to the
Company both in the aggregate and within each year affected.  This is based upon the magnitude of the
adjustment, the nature of the charge and the comprehensive disclosure of the
correction by management in the Company’s Form 10-Q in the first quarter
of 2008.  We feel that the review of the
analyst reports in 2008 confirms this view as:

·                  The focus of
the analysts appears to be on an earnings figure adjusted for unusual events,
such as the legal and settlement charge or the goodwill impairment.  As a consequence, any adjustments must be
viewed in the context of a net income based upon a larger earnings figure than
that recorded under GAAP;

2

·                  Unlike the
goodwill impairment or legal and settlement expense, which are greater in scale
and significance to the Company, analysts did not place a significant amount of
interest in the stock-compensation correction, with some analysts omitting
mention of it entirely.

·                  We are not
aware of any shareholder viewing the correction of the error as a materially
misleading adjustment, notwithstanding the disclosure of the adjustment in the
financial statements, earnings call and certain of the analyst reports.

Please do
not hesitate to contact us if you need further information or clarification.

Sincerely

  /s/ David
  N. Walker

  David N.
  Walker

  Chief Financial Officer

3

Appendix 1

CJS SECURITIES

50 MAIN ST

WHITE PLAINS

NY 10606

Telephone

(914)
287-7600

  MAXIMUS

  MARKET OUTPERFORM

  FEBRUARY 7, 2008

  (MMS-$39.91:NYSE)

  P-TARGET:$49

COMPANY UPDATE

·                  GOOD START TO THE YEAR,  EPS EX-CHARGE $0.07 BETTER THAN EXPECTED

·                  STRONG MARGINS IN OPERATIONS
SEG. MORE THAN OFFSET WEAK SYSTEMS

·                  ECONOMIC
DOWNTURN NOT EXPECTED TO IMPACT CO. AS EVIDENCED BY GROWING BACKLOG

·                 EPS GUIDANCE RAISED TO
ACCOUNT FOR BUYBACK ACCRETION

·                 RAISING FY09 ESTIMATES, REITERATE  MKT. OUTPERFORM RATING

The core operations business
continues to drive solid results at MAXIMUS making up for poor results in its
systems segment. Overall top line sales of 202mm were 1mm shy of our model for
FQ1 08 but again can be attributed to the troubled systems unit which was over
2mm below our estimate.  Operating
margins were 90bps better than expected as the operations unit delivered nearly
300bps higher profitability. Consulting was 80bps above our model and Systems
showed a loss of $3mm vs our just above break even expectation. The company has
struggled to turn this unit around as it appears software development costs
have been mounting and a couple of contracts may be operating at a loss. While
MMS tries to rework these contracts this segment remains a drag on earnings,
masking the strong performance of its core health and human services business
and it now appears that systems will not be profitable this year. Despite this
the other businesses are more than making up for this shortfall and we are
maintaining our prior estimates for the year.

Excluding a $2.2mm charge
for the forfeiture of options EPS would have been approximately $0.07 better
than our estimate. Cash flow from operations was strong at $20.8mm and FCF was
$16.7mm.  The company has done an excellent
job focusing on reducing DSOs, which were 77 days in the quarter within the
targeted 75-85 day range. Guidance for FY08 CFFO remains at $50-60mm with FCF
expected to be $30-40mm. Overall guidance for sales remains unchanged at $850mm
to $880mm but EPS guidance is now higher at $2.60 to $2.85 (was $2.40 to $2.65

  Financial
  Metrics

  GAAP
  Earnings Per Share

  Current Price

  $35.82

  Cash $(MM)

  $62

  FY (Sep)

  2008e

  was

  2009e

  was

  52 Week Range

  $26.65 - $48.33

  Total Debt $(MM)

  $0

  Q1 Dec

  $0.51 a

  $0.50

  Shares Out FD (MM)

  19.0

  Net Debt/Cap

  0%

  Q2 Mar

  $0.62

  Float (MM)

  19

  Return on Equity

  -2%

  Q3 Jun

  $0.78

  Average Daily Vol.

  405 K

  Est. 3-5 yr Rev growth

  10-15%

  Q4 Sep

  $0.85

  Market Cap ($MM)

  $681

  Est. 3-5 yr EPS growth

  13-17%

  Year

  $2.75

  $3.30

  $3.15

  Enterprise Value ($MM)

  $618

  Dividend Yield

  1%

  P/E

  13.0X

  10.9X

  Mgmt/Director Ownership

  1.6%

  Book Value per Share

  $18.49

  EV/ EBITDA

  27.7 X

  5.5X

  Charles Strauzer

  cstrauzer@cjs-securities.com

  PLEASE
  REFER TO THE LAST PAGE OF THIS REPORT FOR IMPORTANT DISCLOSURES, ANALYST
  CERTIFICATION AND PRICE CHART.

but excluded the buyback)
given the previously announced $150mm accelerated share repurchase and will
likely net more shares given the lower share price.

Backlog continues to grow
even though there are some investors who may have the perception that a tough
economic climate will impact MMS.  The
total pipeline now stands at $1.5bln vs. 1.3bln in FY07. There are several
reasons we believe MMS can weather a challenging economic environment;

·                  60% of its
business are BPO type services which are typically driven and funded by the
federal government,

·                  States tend to
outsource more in tougher budgetary environments to try and save money,

·                  Focus of
services on cost reductions and efficiencies, which is appealing to its
customer base during tougher times,

·                  Privatization
services typically are attractive during tighter fiscal cycles because MMS can
do the same job as government more efficiently and often with less expense.

·                  Lastly case
loads usually increase in more difficult times, as there are more people in
need of help increasing the need for the work performed by MMS.

We are maintaining our FY 08
estimates but raising our FY 09 EPS for continued progress in growing its core
operations margins. Our $49 valuation is based on 8X our FY08E EBITDA (below
takeout multiples and inline with comparable public company valuations).      If MMS can rid themselves of unprofitable
businesses it would help further expand margins and could use cash proceeds
received to further enhance value. Accordingly, we reiterate our market
outperform rating.

MAXIMUS

Actual
vs. Estimates for Q1 12/07e (in MMs except EPS)

  Year
  Ago Actual

  Current
  Quarter Actual

  Current
  Q Estimate

  Better/

  Q1
  12/06

  %
  Revs

  Q1
  12/07

  %
  Revs

  Y/Y

  Q1
  12/07e

  %
  Revs

  (Worse)

  Segment
  Revenues

  Consulting

  24.7

  15.3

  %

  22.2

  11.0

  %

  -10.1

  %

  22.2

  10.9

  %

  -0.2

  %

  Systems

  34.5

  21.4

  %

  34.0

  16.8

  %

  -1.6

  %

  36.3

  17.8

  %

  -6.3

  %

  Operations

  101.9

  63.3

  %

  145.8

  72.2

  %

  43.0

  %

  144.8

  71.2

  %

  0.7

  %

  Total
  Revenue

  161.1

  100.0

  %

  202.0

  100.0

  %

  25.3

  %

  203.2

  100.0

  %

  -0.6

  %

  Income
  from Operations

  Consulting

  2.8

  11.4

  %

  1.2

  5.2

  %

  -59.1

  %

  1.0

  4.4

  %

  16.8

  %

  Systems

  (1.6

  )

  -4.6

  %

  (3.1

  )

  -9.2

  %

  96.7

  %

  0.6

  1.5

  %

  -661.9

  %

  Operations

  (16.0

  )

  -15.7

  %

  18.7

  12.8

  %

  -216.8

  %

  12.8

  8.9

  %

  46.0

  %

  Consolidating
  Adjustments

  0.5

  (0.2

  )

  -151.0

  %

  0.5

  -146.0

  %

  Total
  Income from Operations

  (14.4

  )

  -8.9

  %

  16.5

  8.2

  %

  -214.9

  %

  14.9

  7.3

  %

  11.0

  %

  Gross
  Profit

  20.3

  12.6

  %

  52.8

  26.1

  %

  160.2

  %

  51.5

  25.3

  %

  2.5

  %

  Selling,
  General & Administrative

  (34.7

  )

  -21.5

  %

  (36.3

  )

  -18.0

  %

  4.6

  %

  (36.6

  )

  -18.0

  %

  0.9

  %

  EBIT

  (17.4

  )

  -10.8

  %

  16.5

  8.2

  %

  NM

  14.9

  7.3

  %

  11.0

  %

  Interest
  Income

  1.6

  1.0

  %

  1.5

  0.7

  %

  -6.9

  %

  0.3

  0.1

  %

  400.3

  %

  Pretax
  Income

  (15.8

  )

  -9.8

  %

  18.0

  8.9

  %

  NM

  15.2

  7.5

  %

  18.7

  %

  Taxes

  5.8

  3.6

  %

  (7.4

  )

  -3.7

  %

  NM

  (5.9

  )

  -2.9

  %

  -20.1

  %

  Tax Rate

  36.9

  %

  NA

  41.1

  %

  NA

  4.2

  %

  39.0

  %

  NA

  -2.1

  %

  Net
  Income

  $

  (9.9

  )

  -6.2

  %

  $

  10.6

  5.3

  %

  NM

  $

  9.3

  4.6

  %

  14.5

  %

  EPS
  (Fully Diluted)

  $

  (0.48

  )

  NA

  $

  0.51

  NA

  -205.9

  %

  $

  0.50

  NA

  EPS
  (Fully Diluted) Ex Items

  $

  0.57

  $

  0.50

  Fully
  Diluted Shares

  21.6

  NA

  20.9

  NA

  -3.4

  %

  18.7

  NA

  -10.3

  %

  EBITDA

  (10.9

  )

  -6.7

  %

  22.7

  11.2

  %

  -308.5

  %

  21.5

  10.6

  %

  5.5

  %

  Depreciation &
  Amortization

  5.1

  3.1

  %

  5.1

  2.5

  %

  0.0

  %

  5.5

  2.7

  %

  8.8

  %

Source: CJS Securities Estimates, Company Documents

MAXIMUS, Inc. (MMS)

Income
Statement

All
Figures $MM, except per share

  FY 2004a

  FY 2005a

  FY 2006e

  Q1 12/06

  Q2 3/07

  Q3 6/07

  Q4 9/07

  FY 2007e

  Q1 12/07

  Q2 3/08e

  Q3 6/08e

  Q4 9/08e

  FY 2008e

  FY 2009e

  Revenue

  603.8

  647.5

  700.9

  161.1

  179.1

  196.6

  201.9

  738.6

  202.0

  210.0

  226.0

  230.1

  868.0

  950.9

  %
  growth year-to-year

  8.1

  %

  7.2

  %

  8.2

  %

  -1.0

  %

  -0.4

  %

  5.3

  %

  17.5

  %

  5.4

  %

  25.3

  %

  17.3

  %

  15.0

  %

  14.0

  %

  17.5

  %

  9.5

  %

  Cost of
  Revenue

  (427.7

  )

  (467.6

  )

  (547.4

  )

  (140.9

  )

  (136.2

  )

  (138.1

  )

  (146.4

  )

  (561.6

  )

  (149.2

  )

  (153.3

  )

  (160.8

  )

  (161.8

  )

  (625.1

  )

  (675.5

  )

  % of
  Revenue

  70.8

  %

  72.2

  %

  78.1

  %

  87.4

  %

  76.1

  %

  70.3

  %

  72.5

  %

  76.0

  %

  73.9

  %

  73.0

  %

  71.2

  %

  70.3

  %

  72.0

  %

  71.0

  %

  %
  growth year-to-year

  9.2

  %

  9.3

  %

  17.1

  %

  19.4

  %

  1.3

  %

  -13.0

  %

  7.5

  %

  2.6

  %

  5.9

  %

  12.6

  %

  16.4

  %

  10.6

  %

  11.3

  %

  8.0

  %

  Gross
  Profit

  176.0

  180.0

  136.3

  20.3

  42.9

  58.4

  55.5

  177.1

  52.8

  56.7

  65.2

  68.3

  242.9

  275.4

  Gross
  Margin

  29.2

  %

  27.8

  %

  19.5

  %

  12.6

  %

  23.9

  %

  29.7

  %

  27.5

  %

  24.0

  %

  26.1

  %

  27.0

  %

  28.8

  %

  29.7

  %

  28.0

  %

  29.0

  %

  %
  growth year-to-year

  7.0

  %

  2.2

  %

  -24.2

  %

  -54.7

  %

  -5.4

  %

  449.1

  %

  55.8

  %

  29.9

  %

  160.2

  %

  32.2

  %

  11.5

  %

  23.0

  %

  37.2

  %

  13.4

  %

  Selling,
  General & Administrative

  (113.0

  )

  (116.7

  )

  (129.7

  )

  (34.7

  )

  (34.5

  )

  (35.4

  )

  (31.1

  )

  (135.6

  )

  (36.3

  )

  (37.8

  )

  (40.7

  )

  (41.4

  )

  (156.1

  )

  (171.2

  )

  % of
  Revenue

  18.7

  %

  18.0

  %

  18.5

  %

  21.5

  %

  19.2

  %

  18.0

  %

  18.0

  %

  18.4

  %

  18.0

  %

  18.0

  %

  18.0

  %

  18.0

  %

  18.0

  %

  18.0

  %

  %
  Growth Year-to-Year

  5.2

  %

  3.3

  %

  11.1

  %

  9.8

  %

  11.5

  %

  9.5

  %

  -10.9

  %

  4.6

  %

  4.6

  %

  9.7

  %

  15.1

  %

  33.1

  %

  15.2

  %

  9.6

  %

  Write
  off of deferred contract costs

  (17.1

  )

  (28.0

  )

  (6.5

  )

  0.2

  (2.2

  )

  Legal
  Expense

  0.0

  (7.0

  )

  (9.4

  )

  (3.0

  )

  (6.1

  )

  (33.0

  )

  (2.5

  )

  (44.6

  )

  0.0

  0.0

  Operating
  Profit

  63.0

  56.3

  (2.8

  )

  (17.4

  )

  2.3

  (9.9

  )

  21.8

  (3.1

  )

  16.5

  18.9

  24.5

  26.8

  86.7

  104.3

  % of
  Revenue

  10.4

  %

  8.7