Three Washington area technology firms are among the 20 best small businesses in the country based on their average returns on equity over the past five years, according to a ranking by Forbes magazine.

Vanguard Technologies International Inc., a computer services company based in Fairfax, Morino Associates Inc., a Vienna computer software firm, and Group 1 Software Inc. of Washington placed seventh, 10th and 19th, respectively, among 200 firms ranked by the magazine according to their five-year average returns on equity -- annual profits as a percentage of net worth.

The magazine's ninth annual small-company rankings were based on evaluations of more than 5,000 small corporations, which the magazine defined as those with annual sales of between $1 million and $315 million.

First place in the rankings went to Value Line Inc., a New York-based financial analysis and publishing company, which according to Forbes posted an average return on equity over the past five years of 70.8 percent.

T. Rowe Price Associates, a Baltimore investment company, placed 18th.

Forbes priced its list after the stock market tumble of Oct. 19. Between Oct. 12 and Oct. 21, when the rankings were finalized, the aggregate worth of the companies in the top 200 fell to $32.3 billion from $46.4 billion.

After trading as high as $21 per share last March, for example, Vanguard stock sank as low as $6 in the wake of the stock market plunge of two weeks ago. Currently it is trading at $8.

Vanguard Technologies, which had a five-year return on equity of 47.8 percent, is the only government contractor among the top 20.

The eight-year-old firm, which went public last year, does everything from maintaining the 40 million documents in the files of the Patent and Trademark office in Crystal City to running the computer system at the Department of Transportation.

Vanguard's revenue for the first six months of this year was $26 million, up 47 percent from the same period last year. Net earnings of $1.5 million were up 39 percent over last year.

"We don't market to the commercial sector," said Barbara Whittemore, a spokeswoman for the company. "The government market for computer services is about $15 billion a year. Our penetration is 0.3 percent. We don't need to look anywhere else. There's plenty of room to grow."

Morino Associates, which had a 39.2 percent average return on equity over the past five years, develops, markets, and supports a line of software products for use with IBM mainframes, principally in the financial and insurance industries.

The company, which went public just over a year ago, had sales of $33.3 million and profit of $6.2 million last year.

Group 1 Software develops mainframe software for direct marketers and volume mailers.

Since its founding five years ago, the company has built up a client base that includes Citicorp, E.F. Hutton Group Inc., and Dupont Co.

Last year Group 1 had net earnings of $1.2 million on revenue of $8.6 million.

"We're offering automation tools to a direct-mail market that's doing $80 to $100 billion in business every year," said Robert S. Bowen, chairman of the company. "I don't know where the limit is for our company is, but it's far, far beyond anything we're doing currently," Robert S. Bowen, chairman and CEO of Group 1 said.