----

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| R      | QUARTERLY REPORT PURSUANT TO      SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF      1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | FOR      THE QUARTERLY PERIOD ENDED MARCH 31, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | OR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| £ | TRANSITION REPORT PURSUANT TO      SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF      1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | FOR      THE TRANSITION PERIOD      FROM                                                                                                TO                  |

| MASSACHUSETTS                                                       | 04-2211809                                |
|---------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of Incorporation or organization) | (I.R.S.      Employer Identification No.) |

|   | Large      accelerated filer | £                                                    | Accelerated      filer  R              |   |
|--------|------------------------------|-----------------------------------------------------------|--------------------------------------------------|--------|
|   | Non-accelerated      filer   | £ (Do not      check if a smaller reporting company) | Smaller      reporting company  £ |   |

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DYNAMICS RESEARCH CORPORATION

|                               |          |                                                                                                                                                                         | Page   |
|------------------------------------|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part      I. Financial Information |          |
|                               | Item      1.  | Financial      Statements                                                                                                                                                    |   |
|                               |          | Condensed Consolidated Balance Sheets as of March 31, 2008 and      December 31, 2007 (unaudited)                                                                       | 3      |
|                               |          | Condensed Consolidated Statements of Operations for the three      months ended March 31, 2008 and 2007 (unaudited)                                                          | 4      |
|                               |          | Condensed Consolidated Statements of Changes in Stockholders’      Equity and Comprehensive Income for the three months ended March 31, 2008      and 2007 (unaudited) | 5      |
|                               |          | Condensed Consolidated Statements of Cash Flows for the three      months ended March 31, 2008 and 2007 (unaudited)                                                          | 6      |
|                               |          | Notes to Condensed Consolidated Financial Statements      (unaudited)                                                                                                        | 7      |
|                               | Item      2.  | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                                                                             | 16     |
|                               | Item      3.  | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                              | 22     |
|                               | Item      4.  | Controls and Procedures                                                                                                                                                      | 23     |
|                               |          |                                                                                                                                                                         |   |
| Part      II. Other Information    |          |
|                               | Item      1.  | Legal Proceedings                                                                                                                                                            | 23     |
|                               | Item      1A. | Risk Factors                                                                                                                                                                 | 23     |
|                               | Item      2.  | Unregistered Sales of Equity Securities and Use of      Proceeds                                                                                                             | 24     |
|                               | Item      6.  | Exhibits                                                                                                                                                                     | 24     |

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Table of Contents

DYNAMICS RESEARCH 

|                                                                                                                                                                                    |   | March      31, |    |   | December      31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                    |   | 2008           |    |   | 2007              |   |
| Assets                                                                                                                                                                                  |   |           |    |   |              |   |
| Current      assets                                                                                                                                                                     |   |           |    |   |              |   |
| Cash      and cash equivalents                                                                                                                                                          |   | $              | 1,061   |   |              | $      | 2,006 |   |
| Contract      receivables, net                                                                                                                                                          |   |           | 61,911  |   |              |   | 63,570 |   |
| Prepaid      expenses and other current assets                                                                                                                                          |   |           | 3,373   |   |              |   | 2,508 |   |
| Total      current assets                                                                                                                                                               |   |           | 66,345  |   |              |   | 68,084 |   |
| Noncurrent      assets                                                                                                                                                                  |   |           |    |   |              |   |   |   |
| Property      and equipment, net                                                                                                                                                        |   |           | 9,884   |   |              |   | 10,182 |   |
| Goodwill                                                                                                                                                                                |   |           | 63,055  |   |              |   | 63,055 |   |
| Intangible      assets, net                                                                                                                                                             |   |           | 2,560   |   |              |   | 3,069 |   |
| Deferred      tax asset                                                                                                                                                                 |   |           | 1,484   |   |              |   | 1,484 |   |
| Other      noncurrent assets                                                                                                                                                            |   |           | 3,918   |   |              |   | 4,079 |   |
| Total      noncurrent assets                                                                                                                                                            |   |           | 80,901  |   |              |   | 81,869 |   |
| Total      assets                                                                                                                                                                       |   | $              | 147,246 |   |              | $      | 149,953 |   |
| Liabilities      and stockholders' equity                                                                                                                                               |   |           |    |   |              |   |   |   |
| Current      liabilities                                                                                                                                                                |   |           |    |   |              |   |   |   |
| Accounts      payable                                                                                                                                                                   |   | $              | 11,119  |   |              | $      | 12,163 |   |
| Accrued      compensation and employee benefits                                                                                                                                         |   |           | 11,943  |   |              |   | 13,409 |   |
| Deferred      taxes                                                                                                                                                                     |   |           | 5,994   |   |              |   | 8,486 |   |
| Other      accrued expenses                                                                                                                                                             |   |           | 13,349  |   |              |   | 3,078 |   |
| Total      current liabilities                                                                                                                                                          |   |           | 42,405  |   |              |   | 37,136 |   |
| Long-term      liabilities                                                                                                                                                              |   |           |    |   |              |   |   |   |
| Long-term      debt                                                                                                                                                                     |   |           | 5,000   |   |              |   | 7,737 |   |
| Other      long-term liabilities                                                                                                                                                        |   |           | 8,172   |   |              |   | 8,576 |   |
| Total      long-term liabilities                                                                                                                                                        |   |           | 13,172  |   |              |   | 16,313 |   |
| Total      liabilities                                                                                                                                                                  |   |           | 55,577  |   |              |   | 53,449 |   |
| Commitments      and contingencies                                                                                                                                                      |   |           |    |   |              |   |   |   |
| Stockholders'      equity                                                                                                                                                               |   |           |    |   |              |   |   |   |
| Preferred      stock, $0.10 par value; 5,000,000 shares authorized; no shares issued and      outstanding                                                                               |   |           | -       |   |              |   | - |   |
| Common      stock, $0.10 par value; 30,000,000 shares authorized; 9,558,433 and      9,509,849 shares issued and outstanding at March 31, 2008 and December 31,      2007, respectively |   |           | 956     |   |              |   | 951 |   |
| Capital      in excess of par value                                                                                                                                                     |   |           | 50,775  |   |              |   | 50,251 |   |
| Accumulated      other comprehensive loss                                                                                                                                               |   |           | (6,853  | )      |              |   | (6,745 | ) |
| Retained      earnings                                                                                                                                                                  |   |           | 46,791  |   |              |   | 52,047 |   |
| Total      stockholders' equity                                                                                                                                                         |   |           | 91,669  |   |              |   | 96,504 |   |
| Total      liabilities and stockholders' equity                                                                                                                                         |   | $              | 147,246 |   |              | $      | 149,953 |   |

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Table of Contents

DYNAMICS RESEARCH 

|                                                           |   | Three      Months Ended |      |
|----------------------------------------------------------------|--------|-------------------------|-----------|
|                                                           |   | March      31,          |      |
|                                                           |   | 2008                    |      |   | 2007 |   |
| Contract      revenue                                          |   | $                       | 54,773    |   |   | $ | 55,912 |   |
| Product      sales                                             |   |                    | 1,705     |   |   |   | 868 |   |
| Total      revenue                                             |   |                    | 56,478    |   |   |   | 56,780 |   |
|                                                           |   |                    |      |   |   |   |   |   |
| Cost      of contract revenue                                  |   |                    | 46,212    |   |   |   | 46,933 |   |
| Cost      of product sales                                     |   |                    | 1,605     |   |   |   | 1,148 |   |
| Total      cost of  revenue                          |   |                    | 47,817    |   |   |   | 48,081 |   |
|                                                           |   |                    |      |   |   |   |   |   |
| Gross      profit on contract revenue                          |   |                    | 8,561     |   |   |   | 8,979 |   |
| Gross      profit (loss) on product sales                      |   |                    | 100       |   |   |   | (280 | ) |
| Total      gross profit                                        |   |                    | 8,661     |   |   |   | 8,699 |   |
|                                                           |   |                    |      |   |   |   |   |   |
| Selling,      general and administrative expenses              |   |                    | 5,401     |   |   |   | 5,598 |   |
| Provision      for litigation                                  |   |                    | 8,819     |   |   |   | 181 |   |
| Amortization      of intangible assets                         |   |                    | 509       |   |   |   | 650 |   |
| Operating      income (loss)                                   |   |                    | (6,068    | ) |   |   | 2,270 |   |
| Interest      expense, net                                     |   |                    | (139      | ) |   |   | (456 | ) |
| Other      income (expense), net                               |   |                    | (71       | ) |   |   | 133 |   |
| Income      (loss) before provision (benefit) for income taxes |   |                    | (6,278    | ) |   |   | 1,947 |   |
| Provision      (benefit) for income taxes                      |   |                    | (1,022    | ) |   |   | 824 |   |
| Net      income (loss)                                         |   | $                       | (5,256    | ) |   | $ | 1,123 |   |
|                                                           |   |                    |      |   |   |   |   |   |
| Earnings      (loss) per common share                          |   |                    |      |   |   |   |   |   |
| Basic                                                          |   | $                       | (0.56     | ) |   | $ | 0.12 |   |
| Diluted                                                        |   | $                       | (0.56     | ) |   | $ | 0.12 |   |
|                                                           |   |                    |      |   |   |   |   |   |
| Weighted      average shares outstanding                       |   |                    |      |   |   |   |   |   |
| Basic                                                          |   |                    | 9,436,054 |   |   |   | 9,256,566 |   |
| Diluted                                                        |   |                    | 9,436,054 |   |   |   | 9,507,446 |   |

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Table of Contents

DYNAMICS RESEARCH CORPORATION

|                                                                                                            |   |              |   |   |           |   |   | Capital        |   |           | Accumulated |   |        |     |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|----------------|--------|--------|----------------|--------|----------------|-------------|--------|-------------|----------|--------|--------|--------|--------|
|                                                                                                            |   |              |   |   |           |   |   | in      Excess |   |           | Other       |   |        |     |   |   |   |   |
|                                                                                                            |   | Common      Stock |   |   | of      Par    |   |   | Comprehensive  |   |           | Retained    |   |        |     |   |
|                                                                                                            |   | Shares            |   |   | Par      value |   |   | Value          |   |           | Loss        |   |        | Earnings |   |   | Total  |   |
| Balance      at December 31, 2007                                                                               |   |              | 9,510  |   |           | $      | 951    |           |   | $              | 50,251      |   |        | $        | (6,745 | )      |   | $      | 52,047 |   |   | $ | 96,504 |   |
| Comprehensive      loss:                                                                                        |   |              |   |   |           |   |   |           |   |           |        |   |        |     |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                   |   |              | -      |   |           |   | -      |           |   |           | -           |   |        |     | -      |   |   |   | (5,256 | ) |   |   | (5,256 | ) |
| Other      comprehensive loss, net of tax:                                                                      |   |              |   |   |           |   |   |           |   |           |        |   |        |     |   |   |   |   |   |   |   |   |   |   |
| Reclassification      adjustment for gain on sale of investment realized in net    loss                         |   |              | -      |   |           |   | -      |           |   |           | -           |   |        |     | (108   | )      |   |   | - |   |   |   | (108 | ) |
| Comprehensive      loss                                                                                         |   |              | -      |   |           |   | -      |           |   |           | -           |   |        |     | -      |   |   |   | - |   |   |   | (5,364 | ) |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |              | 28     |   |           |   | 3      |           |   |           | 231         |   |        |     | -      |   |   |   | - |   |   |   | 234 |   |
| Issuance      of restricted stock                                                                               |   |              | 34     |   |           |   | 3      |           |   |           | (3          | )      |        |     | -      |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |              | (2     | )      |           |   | -      |           |   |           | -           |   |        |     | -      |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |              | (12    | )      |           |   | (1     | )              |   |           | (118        | )      |        |     | -      |   |   |   | - |   |   |   | (119 | ) |
| Share-based      compensation                                                                                   |   |              | -      |   |           |   | -      |           |   |           | 402         |   |        |     | -      |   |   |   | - |   |   |   | 402 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |              | -      |   |           |   | -      |           |   |           | 12          |   |        |     | -      |   |   |   | - |   |   |   | 12 |   |
| Balance      at March 31, 2008                                                                                  |   |              | 9,558  |   |           | $      | 956    |           |   | $              | 50,775      |   |        | $        | (6,853 | )      |   | $      | 46,791 |   |   | $ | 91,669 |   |
|                                                                                                            |   |              |   |   |           |   |   |           |   |           |        |   |        |     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |              |   |   |           |   |   |           |   | Capital        |        |   | Accumulated |     |   |   |   |   |   |   |   |   |
|                                                                                                            |   |              |   |   |           |   |   |           |   | in      Excess |        |   | Other       |     |   |   |   |   |   |   |   |   |
|                                                                                                            |   | Common      Stock |   |   | of      Par    |   |   | Comprehensive  |   |           | Retained    |   |        |     |   |   |
|                                                                                                            |   | Shares            |   |   | Par      value |   |   | Value          |   |           | Loss        |   |        | Earnings |   |   | Total  |   |
| Balance      at December 31, 2006                                                                               |   |              | 9,315  |   |           | $      | 931    |           |   | $              | 47,644      |   |        | $        | (9,206 | )      |   | $      | 44,945 |   |   | $ | 84,314 |   |
| Comprehensive      income:                                                                                      |   |              |   |   |           |   |   |           |   |           |        |   |        |     |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                 |   |              | -      |   |           |   | -      |           |   |           | -           |   |        |     | -      |   |   |   | 1,123 |   |   |   | 1,123 |   |
| Comprehensive      income                                                                                       |   |              | -      |   |           |   | -      |           |   |           | -           |   |        |     | -      |   |   |   | - |   |   |   | 1,123 |   |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |              | 52     |   |           |   | 6      |           |   |           | 417         |   |        |     | -      |   |   |   | - |   |   |   | 423 |   |
| Issuance      of restricted stock                                                                               |   |              | 32     |   |           |   | 3      |           |   |           | (3          | )      |        |     | -      |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |              | (4     | )      |           |   | -      |           |   |           | -           |   |        |     | -      |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |              | (17    | )      |           |   | (2     | )              |   |           | (173        | )      |        |     | -      |   |   |   | - |   |   |   | (175 | ) |
| Share-based      compensation                                                                                   |   |              | -      |   |           |   | -      |           |   |           | 396         |   |        |     | -      |   |   |   | - |   |   |   | 396 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |              | -      |   |           |   | -      |           |   |           | 29          |   |        |     | -      |   |   |   | - |   |   |   | 29 |   |
| Balance      at March 31, 2007                                                                                  |   |              | 9,378  |   |           | $      | 938    |           |   | $              | 48,310      |   |        | $        | (9,206 | )      |   | $      | 46,068 |   |   | $ | 86,110 |   |

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Table of Contents

DYNAMICS RESEARCH 

|                                                                                                |   | Three      Months Ended |    |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                                |   | March      31,          |    |
|                                                                                                |   | 2008                    |    |   | 2007 |   |
|  Cash      flows from operating activities:                                                    |   |                    |    |   |   |   |   |   |
| Net      income (loss)                                                                              |   | $                       | (5,256  | ) |   | $ | 1,123 |   |
| Adjustments      to reconcile net cash provided by (used in) operating      activities:             |   |                    |    |   |   |   |   |   |
| Depreciation                                                                                        |   |                    | 700     |   |   |   | 825 |   |
| Amortization      of intangible assets                                                              |   |                    | 509     |   |   |   | 650 |   |
| Share-based      compensation                                                                       |   |                    | 402     |   |   |   | 396 |   |
| Investment      income from equity interest                                                         |   |                    | 54      |   |   |   | (81 | ) |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions    |   |                    | (12     | ) |   |   | (29 | ) |
| Provision      for litigation                                                                       |   |                    | 8,819   |   |   |   | 181 |   |
| Deferred      income taxes                                                                          |   |                    | (2,421  | ) |   |   | (861 | ) |
| Other                                                                                               |   |                    | (245    | ) |   |   | (132 | ) |
| Change      in operating assets and liabilities:                                                    |   |                    |    |   |   |   |   |   |
| Contract      receivables, net                                                                      |   |                    | 1,659   |   |   |   | (12,609 | ) |
| Prepaid      expenses and other current assets                                                      |   |                    | (1,220  | ) |   |   | (701 | ) |
| Accounts      payable                                                                               |   |                    | (1,044  | ) |   |   | (3,388 | ) |
| Accrued      compensation and employee benefits                                                     |   |                    | (1,466  | ) |   |   | 543 |   |
| Other      accrued expenses                                                                         |   |                    | 1,380   |   |   |   | (799 | ) |
| Other      long-term liabilities                                                                    |   |                    | (235    | ) |   |   | (2,433 | ) |
| Net      cash provided by (used in) operating activities                                            |   |                    | 1,624   |   |   |   | (17,315 | ) |
| Cash      flows from investing activities:                                                          |   |                    |    |   |   |   |   |   |
| Additions      to property, plant and equipment                                                     |   |                    | (402    | ) |   |   | (509 | ) |
| Proceeds      from sale of investments and long-lived assets                                        |   |                    | 273     |   |   |   | - |   |
| Dividends      from equity investment                                                               |   |                    | 277     |   |   |   | - |   |
| Payments      related to the sale of building                                                       |   |                    | (35     | ) |   |   | - |   |
| Increase      in other assets                                                                       |   |                    | (191    | ) |   |   | (26 | ) |
| Net      cash used in investing activities                                                          |   |                    | (78     | ) |   |   | (535 | ) |
| Cash      flow from financing activities:                                                           |   |                    |    |   |   |   |   |   |
| Borrowings      under revolving credit agreement                                                    |   |                    | 20,497  |   |   |   | 65,770 |   |
| Repayments      under revolving credit agreement                                                    |   |                    | (23,234 | ) |   |   | (55,870 | ) |
| Proceeds      from the exercise of stock options and employee stock purchase plan      transactions |   |                    | 234     |   |   |   | 423 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions    |   |                    | 12      |   |   |   | 29 |   |
| Net      cash provided by (used in) financing activities                                            |   |                    | (2,491  | ) |   |   | 10,352 |   |
| Net      decrease in cash and cash equivalents                                                      |   |                    | (945    | ) |   |   | (7,498 | ) |
| Cash      and cash equivalents, beginning of period                                                 |   |                    | 2,006   |   |   |   | 7,887 |   |
| Cash      and cash equivalents, end of period                                                       |   | $                       | 1,061   |   |   | $ | 389 |   |

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NOTE 1. BASIS OF 

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|                                                                                                   |   | March 31, |    |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                                                                   |   | 2008           |    |   | 2007              |   |
| Contract      receivables, net                                                                         |   |           |    |   |              |   |
| Billed      receivables                                                                                |   | $              | 29,059  |   |              | $      | 31,884 |   |
| Unbilled      receivables(1):                                                                          |   |           |    |   |              |   |   |   |
| Revenues      recorded in excess of milestone billings on fixed price contract with      State of Ohio |   |           | 10,961  |   |              |   | 7,572 |   |
| Retainages      and fee withholdings                                                                   |   |           | 1,106   |   |              |   | 1,529 |   |
| Other      unbilled receivables                                                                        |   |           | 21,695  |   |              |   | 23,488 |   |
| Total      unbilled receivables                                                                        |   |           | 33,762  |   |              |   | 32,589 |   |
| Allowance      for doubtful accounts                                                                   |   |           | (910    | )      |              |   | (903 | ) |
| Contract      receivables, net                                                                         |   | $              | 61,911  |   |              | $      | 63,570 |   |
|                                                                                                   |   |           |    |   |              |   |   |   |
| Property      and equipment, net:                                                                      |   |           |    |   |              |   |   |   |
| Production      equipment                                                                              |   | $              | 11,919  |   |              | $      | 11,917 |   |
| Software                                                                                               |   |           | 11,083  |   |              |   | 11,052 |   |
| Furniture      and other equipment                                                                     |   |           | 7,154   |   |              |   | 6,862 |   |
| Leasehold      improvements                                                                            |   |           | 2,452   |   |              |   | 2,375 |   |
| Property      and equipment                                                                            |   |           | 32,608  |   |              |   | 32,206 |   |
| Less      accumulated depreciation                                                                     |   |           | (22,724 | )      |              |   | (22,024 | ) |
| Property      and equipment, net                                                                       |   | $              | 9,884   |   |              | $      | 10,182 |   |
|                                                                                                   |   |           |    |   |              |   |   |   |
| Other      noncurrent assets:                                                                          |   |           |    |   |              |   |   |   |
| Deferred      compensation plan investments                                                            |   | $              | 1,581   |   |              | $      | 1,747 |   |
| Prepaid      pension asset                                                                             |   |           | 1,018   |   |              |   | 718 |   |
| Equity      investments                                                                                |   |           | 788     |   |              |   | 1,119 |   |
| Other                                                                                                  |   |           | 531     |   |              |   | 495 |   |
| Other      noncurrent assets                                                                           |   | $              | 3,918   |   |              | $      | 4,079 |   |
|                                                                                                   |   |           |    |   |              |   |   |   |
| Accrued      compensation and employee benefits:                                                       |   |           |    |   |              |   |   |   |
| Accrued      payroll and payroll  taxes                                                      |   | $              | 5,637   |   |              | $      | 6,967 |   |
| Accrued      vacation                                                                                  |   |           | 4,702   |   |              |   | 4,273 |   |
| Other                                                                                                  |   |           | 1,604   |   |              |   | 2,169 |   |
| Accrued      compensation and employee benefits                                                        |   | $              | 11,943  |   |              | $      | 13,409 |   |
|                                                                                                   |   |           |    |   |              |   |   |   |
| Other      accrued expenses:                                                                           |   |           |    |   |              |   |   |   |
| Accrued      litigation liability                                                                      |   | $              | 9,000   |   |              | $      | 181 |   |
| Accrued      income taxes                                                                              |   |           | 1,649   |   |              |   | 585 |   |
| Deferred      gain on sale of building                                                                 |   |           | 676     |   |              |   | 676 |   |
| Other                                                                                                  |   |           | 2,024   |   |              |   | 1,636 |   |
| Other      accrued expenses                                                                            |   | $              | 13,349  |   |              | $      | 3,078 |   |
|                                                                                                   |   |           |    |   |              |   |   |   |
| Other      long-term liabilities:                                                                      |   |           |    |   |              |   |   |   |
| Deferred      gain on sale of building, net                                                            |   | $              | 4,564   |   |              | $      | 4,733 |   |
| Deferred      compensation plan liability                                                              |   |           | 1,581   |   |              |   | 1,747 |   |
| Other                                                                                                  |   |           | 2,027   |   |              |   | 2,096 |   |
|    Other      long-term liabilities                                                     |   | $              | 8,172   |   |              | $      | 8,576 |   |

| (1) | Contract      receivables are classified as current assets in accordance with industry      practice.  At March 31, 2008 and December 31, 2007, $508 and      $553, respectively, of unbilled retainages and fee withholdings are not      anticipated to be billed within twelvemonths. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Remainder      of 2008 |   | $ | 1,529 |   |
|------------------------|--------|---|-------|--------|
| 2009                   |   | $ | 1,031 |   |

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|                                               |   | Three      Months Ended |   |
|----------------------------------------------------|--------|-------------------------|--------|
|                                               |   | March      31,          |   |
|                                               |   | 2008                    |   |   | 2007 |   |
| Interest      cost on projected benefit obligation |   | $                       | 959    |   |   | $ | 1,006 |   |
| Expected      return on plan assets                |   |                    | (1,396 | ) |   |   | (1,464 | ) |
| Recognized      actuarial loss                     |   |                    | 137    |   |   |   | 270 |   |
| Net      periodic pension income                   |   | $                       | (300   | ) |   | $ | (188 | ) |

|                                        |   | Three      Months Ended |   |
|---------------------------------------------|--------|-------------------------|--------|
|                                        |   | March      31,          |   |
|                                        |   | 2008                    |   |   | 2007 |   |
| Cost      of products and services          |   | $                       | 163    |   |   | $ | 126 |   |
| Selling,      general and administrative    |   |                    | 239    |   |   |   | 270 |   |
| Total      share-based compensation expense |   | $                       | 402    |   |   | $ | 396 |   |

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|                                  |   |           |      |   |     |   |   | Weighted        |   |   |      |   |
|---------------------------------------|--------|----------------|-----------|--------|----------|--------|--------|-----------------|--------|--------|-----------|--------|
|                                  |   |           |      |   |     |   |   | Average         |   |   |      |   |
|                                  |   |           |      |   | Weighted |   |   | Remaining       |   |   |      |   |
|                                  |   |           |      |   | Average  |   |   | Contractual     |   |   | Aggregate |   |
|                                  |   | Number      of |      |   | Exercise |   |   | Term            |   |   | Intrinsic |   |
|                                  |   | Shares         |      |   | Price    |   |   | (in      years) |   |   | Value     |   |
| Outstanding      at December 31, 2007 |   |           | 1,012,078 |   |     | $      | 8.34   |            |   |   | 3.0       |   |   | $ | 3,030 |   |
| Granted                               |   |           | -         |   |     | $      | -      |            |   |   |      |   |   |   |   |   |
| Exercised                             |   |           | (14,900   | )      |     | $      | 7.60   |            |   |   |      |   |   |   |   |   |
| Cancelled                             |   |           | (6,600    | )      |     | $      | 16.19  |            |   |   |      |   |   |   |   |   |
| Outstanding      at March 31, 2008    |   |           | 990,578   |   |     | $      | 8.30   |            |   |   | 2.8       |   |   | $ | 2,328 |   |
| Exercisable      at March 31, 2008    |   |           | 495,578   |   |     | $      | 7.66   |            |   |   | 2.4       |   |   | $ | 1,749 |   |

|                                                           |   | Three      Months Ended |   |
|----------------------------------------------------------------|--------|-------------------------|--------|
|                                                           |   | March      31,          |   |
|                                                           |   | 2008                    |   |   | 2007 |   |
| Amounts      realized or received from stock option exercises: |   |                    |   |   |   |   |
| Cash      proceeds received                                    |   | $                       | 113    |   |   | $ | 261 |   |
| Intrinsic      value realized                                  |   | $                       | 34     |   |   | $ | 71 |   |
| Income      tax benefit realized                               |   | $                       | 11     |   |   | $ | 27 |   |

|                                |   |           |    |   | Weighted        |   |
|-------------------------------------|--------|----------------|---------|--------|-----------------|--------|
|                                |   |           |    |   | Average         |   |
|                                |   | Number      of |    |   | Grant-Date      |   |
|                                |   | Shares         |    |   | Fair      Value |   |
| Nonvested      at December 31, 2007 |   |           | 223,330 |   |            | $      | 11.43 |   |
| Granted                             |   |           | 34,000  |   |            | $      | 10.00 |   |
| Vested                              |   |           | (34,803 | )      |            | $      | 13.58 |   |
| Cancelled                           |   |           | (1,800  | )      |            | $      | 11.86 |   |
| Nonvested      at March 31, 2008    |   |           | 220,727 |   |            | $      | 10.87 |   |

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|                                                                    |   | Three      Months Ended |      |
|-------------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                                    |   | March      31,          |      |
|                                                                    |   | 2008                    |      |   | 2007 |   |
|  Weighted      average shares outstanding - Basic                  |   |                    | 9,436,054 |   |   |   | 9,256,566 |   |
|  Dilutive      effect of stock options and restricted stock grants |   |                    | -         |   |   |   | 250,880 |   |
|  Weighted      average shares outstanding - Diluted                |   |                    | 9,436,054 |   |   |   | 9,507,446 |   |

|                                  |   | Three      Months Ended |   |
|---------------------------------------|--------|-------------------------|--------|
|                                  |   | March      31,          |   |
|                                  |   | 2008                    |   |   | 2007 |   |
| Revenues      from external customers |   |                    |   |   |   |   |
| Systems      and Services             |   | $                       | 54,773 |   |   | $ | 55,912 |   |
| Metrigraphics                         |   |                    | 1,705  |   |   |   | 868 |   |
|                                  |   | $                       | 56,478 |   |   | $ | 56,780 |   |
| Gross      profit (loss)              |   |                    |   |   |   |   |   |   |
| Systems      and Services             |   | $                       | 8,561  |   |   | $ | 8,979 |   |
| Metrigraphics                         |   |                    | 100    |   |   |   | (280 | ) |
|                                  |   | $                       | 8,661  |   |   | $ | 8,699 |   |
| Operating      income (loss)          |   |                    |   |   |   |   |   |   |
| Systems      and Services             |   | $                       | (5,841 | ) |   | $ | 2,798 |   |
| Metrigraphics                         |   |                    | (227   | ) |   |   | (528 | ) |
|                                  |   | $                       | (6,068 | ) |   | $ | 2,270 |   |

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|                                       |   | Three      Months Ended March 31, |   |
|--------------------------------------------|--------|----------------------------------------|--------|
|                                       |   | 2008                                   |   |   | 2007 |   |
|                                       |   | Revenue                                |   |   | % |   |   | Revenue |   |   | % |   |
| Air      Force Aeronautical Systems Center |   | $                                      | 4,543  |   |   |   | 8 | % |   | $ | 7,567 |   |   |   | 13 | % |

|                                       |   | March 31, |   |   | December 31, |   |
|--------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                       |   | 2008           |   |   | 2007              |   |
| Air      Force Aeronautical Systems Center |   | $              | 3,843  |   |              | $      | 5,261 |   |

|                           |   | March 31, |   |   | December 31, |   |
|--------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                           |   | 2008           |   |   | 2007              |   |
| Contract      receivables, net |   | $              | 2,483  |   |              | $      | 4,486 |   |
| Other      receivables, net    |   | $              | -      |   |              | $      | 314 |   |

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Item 2. Management’sDiscussion and Analysis of Financial Condition and Resultsof Operations

|   | • |   | the      ability to make more meaningful period-to-period comparisons of our      ongoing operating results;                      |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|   |    |   |                                                                                                                              |
|   | • |   | the      ability to better identify trends in our underlying business and perform      related trend analysis;                    |
|   |    |   |                                                                                                                              |
|   | • |   | a      higher degree of transparency for certain expenses (particularly when a      specific charge impacts multiple line items); |
|   |    |   |                                                                                                                              |
|   | • |   | a      better understanding of how management plans and measures our underlying      business; and                                |
|   |    |   |                                                                                                                              |
|   | • |   | an      easier way to compare our most recent results of operations against      investor and analyst financialmodels.            |

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|                                                      |   | Three      Months Ended |       |   |
|-----------------------------------------------------------|--------|-------------------------|------------|--------|
|                                                      |   | March      31,          |       |   |
|                                                      |   | 2008                    |       |   |   | 2007 |   |   |
| (in      millions)                                        |   |                    |  $(1) |   |   | %(2) |   |   |   |  $ (1) |   |   | %(2) |   |   |
| GAAP      operating income (loss)                         |   | $                       | (6.1       | )      |   | (10.7 | )% |   |   | $ | 2.5 |   |   | 4.3 | % |   |
| Provision      for litigation                             |   |                    | 8.8        |   |   | 15.6 | % |   |   |   | 0.2 |   |   | 0.3 | % |   |
| Non-GAAP      operating income                            |   | $                       | 2.8        |   |   | 4.9 | % |   |   | $ | 2.6 |   |   | 4.6 | % |   |
|                                                      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      income (loss) before provision for income taxes |   | $                       | (6.3       | )      |   | (11.1 | )% |   |   | $ | 1.9 |   |   | 3.4 | % |   |
| Provision      for litigation                             |   |                    | 8.8        |   |   | 15.6 | % |   |   |   | 0.2 |   |   | 0.3 | % |   |
| Non-GAAP      income before provision for income taxes    |   | $                       | 2.5        |   |   | 4.5 | % |   |   | $ | 2.1 |   |   | 3.7 | % |   |
|                                                      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      provision (benefit) for income taxes            |   | $                       | (1.0       | )      |   | 16.3 | % | (3) |   | $ | 0.8 |   |   | 42.3 | % | (3) |
| Tax      benefit for provision for litigation             |   |                    | 2.1        |   |   | 24.1 | % | (3) |   |   | 0.1 |   |   | 39.8 | % | (3) |
| Non-GAAP      provision for income taxes                  |   | $                       | 1.1        |   |   | 43.4 | % | (3) |   | $ | 0.9 |   |   | 42.1 | % | (3) |
|                                                      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      net income (loss)                               |   | $                       | (5.3       | )      |   | (9.3 | )% |   |   | $ | 1.1 |   |   | 2.0 | % |   |
| Provision      for litigation, net of tax benefit         |   |                    | 6.7        |   |   | 11.9 | % |   |   |   | 0.1 |   |   | 0.2 | % |   |
| Non-GAAP      net income                                  |   | $                       | 1.4        |   |   | 2.5 | % |   |   | $ | 1.2 |   |   | 2.2 | % |   |

| (1) | Totals      may not add due to rounding.                                                                                                                                                                                                                                              |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Represents      a percentage of total revenue of $56.5 million and $56.8 million in the      three months ended March 31, 2008 and 2007, respectively, excluding the      percentages for provision (benefit) for income taxes and the tax benefit      for provision for litigation. |
| (3) | These      amounts represent a percentage of GAAP income (loss) before provision for      income taxes, provision for litigation and non-GAAP income before      provision for income taxes,respectively.                                                                             |

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|                                                |   | Three      Months Ended March 31, |       |   |
|-----------------------------------------------------|--------|-----------------------------------|------------|--------|
|                                                |   | 2008                              |       |   |   | 2007 |   |   |
| (in      millions)                                  |   |                              |  $(1) |   | % |   |   |   |   |  $(1) |   | % |   |   |
|  Contract      revenue                         |   | $                                 | 54.8       |   |   | 97.0 | % |   |   | $ | 55.9 |   |   | 98.5 | % |   |
|  Product      sales                            |   |                              | 1.7        |   |   | 3.0 |   |   |   |   | 0.9 |   |   | 1.5 |   |   |
|  Total      revenue                            |   | $                                 | 56.5       |   |   | 100.0 | % |   |   | $ | 56.8 |   |   | 100.0 | % |   |
|                                                |   |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross      profit on contract revenue (3)     |   | $                                 | 8.6        |   |   | 15.6 | % |   |   | $ | 9.0 |   |   | 16.1 | % |   |
|  Gross      profit (loss) on product sales (3) |   |                              | 0.1        |   |   | 5.9 | % |   |   |   | (0.3 | ) |   | (32.3 | )% |   |
|  Total      gross profit (3)                   |   |                              | 8.7        |   |   | 15.3 | % |   |   |   | 8.7 |   |   | 15.3 | % |   |
|                                                |   |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling,      general and administrative      |   |                              | 5.4        |   |   | 9.6 | % |   |   |   | 5.6 |   |   | 9.9 | % |   |
|  Provision      for litigation                 |   |                              | 8.8        |   |   | 15.6 | % |   |   |   | 0.2 |   |   | 0.3 | % |   |
|  Amortization      of intangible assets        |   |                              | 0.5        |   |   | 0.9 | % |   |   |   | 0.7 |   |   | 1.1 | % |   |
|  Operating      income (loss)                  |   |                              | (6.1       | )      |   | (10.7 | )% |   |   |   | 2.3 |   |   | 4.0 | % |   |
|  Interest      expense, net                    |   |                              | (0.1       | )      |   | (0.2 | )% |   |   |   | (0.5 | ) |   | (0.8 | )% |   |
|  Other      income, net                        |   |                              | (0.1       | )      |   | (0.1 | )% |   |   |   | 0.1 |   |   | 0.2 | % |   |
|  Provision      (benefit) for income taxes     |   |                              | (1.0       | )      |   | 16.3 | % | (2) |   |   | 0.8 |   |   | 42.3 | % | (2) |
|  Net      income (loss)                        |   | $                                 | (5.3       | )      |   | (9.3 | )% |   |   | $ | 1.1 |   |   | 2.0 | % |   |

| (1) | Totals      may not add due to rounding.                                                                                       |
|-----|--------------------------------------------------------------------------------------------------------------------------------|
| (2) | The      percentage of provision (benefit) for income taxes relates to a percentage      of income (loss) before income taxes. |
| (3) | These      amounts represent a percentage of contract revenues, product sales and      total revenues, respectively.           |

|                                            |   | Three      Months Ended March 31, |             |
|-------------------------------------------------|--------|-----------------------------------|------------------|
|                                            |   | 2008                              |             |   | 2007 |   |
| (in      millions)                              |   |                              |  $      (1) |   |   |   |  %(1) |   |   |   |  $(1) |   |   |   | %(1) |   |
| National      defense and intelligence agencies |   | $                                 | 41.0             |   |   |   | 74.9 | % |   | $ | 44.6 |   |   |   | 79.8 | % |
| Federal      civilian agencies                  |   |                              | 7.9              |   |   |   | 14.4 |   |   |   | 7.6 |   |   |   | 13.5 |   |
| State      and local government agencies        |   |                              | 5.2              |   |   |   | 9.6 |   |   |   | 3.5 |   |   |   | 6.3 |   |
| Other                                           |   |                              | 0.6              |   |   |   | 1.1 |   |   |   | 0.2 |   |   |   | 0.3 |   |
| Total      contract revenue                     |   | $                                 | 54.8             |   |   |   | 100.0 | % |   | $ | 55.9 |   |   |   | 100.0 | % |

| (1) | Totals      may not add due to rounding. |
|-----|------------------------------------------|

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|                                                     |   | Three      Months Ended |   |
|----------------------------------------------------------|--------|-------------------------|--------|
|                                                     |   | March      31,          |   |
|                                                     |   | 2008                    |   |   | 2007 |   |
|  Time      and materials                            |   |                    | 55     | % |   |   | 57 | % |
|  Cost      reimbursable                             |   |                    | 19     |   |   |   | 22 |   |
|  Fixed      price, including service type contracts |   |                    | 26     |   |   |   | 21 |   |
|                                                     |   |                    | 100    | % |   |   | 100 | % |
|                                                     |   |                    |   |   |   |   |   |   |
|  Prime      contract                                |   |                    | 61     | % |   |   | 57 | % |
|  Sub-contract                                       |   |                    | 39     |   |   |   | 43 |   |
|                                                     |   |                    | 100    | % |   |   | 100 | % |

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

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Item 4. CONTROLS AND 

Item 1. LEGAL PROCEEDINGS

Item 1A. RISK FACTORS

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Item 2.  UNREGISTERED SALES 

|                                                 |   |              |   |   |               |   |   | Total Number |   |   | Approximate              |   |
|-------------------------------------------------|--------|-------------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------------------|--------|
|                                            |   |              |   |   |               |   |   | of      Shares    |   |   | Dollar      Value        |   |
|                                            |   |              |   |   |               |   |   | Purchased      as |   |   | of Shares that |   |
|                                            |   |              |   |   |               |   |   | Part      of      |   |   | May      Yet Be          |   |
|                                            |   | Total Number |   |   | Average      Price |   |   | Publicly          |   |   | Purchased                |   |
|                                            |   | of      Shares    |   |   | Paid      Per      |   |   | Announced         |   |   | Under      the           |   |
| Period                                          |   | Purchased         |   |   | Share              |   |   | Programs          |   |   | Programs                 |   |
| January      1, 2008 to January 31, 2008        |   |              | 738    |   |               | $      | 10.24  |              |   |   | -                        |   |   | $ | - |   |
| February      1, 2008 to February 29, 2008      |   |              | 3,501  |   |               | $      | 9.43   |              |   |   | -                        |   |   |   | - |   |
| March      1, 2008 to  March 31, 2008 |   |              | 7,828  |   |               | $      | 9.98   |              |   |   | -                        |   |   |   | - |   |
| Total                                           |   |              | 12,067 |   |               | $      | 9.84   |              |   |   | -                        |   |   | $ | - |   |

Item 6. EXHIBITS

| 31.1   | Certification      of the Chief Executive Officer pursuant to Rule 13a-14(a) under the      Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                    |
| 31.2   | Certification      of the Chief Financial Officer pursuant to Rule 13a-14(a) under the      Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002. |
|   |                                                                                                                                                                                                    |
| 32.1   | Certification      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.                                   |
|   |                                                                                                                                                                                                    |
| 32.2   | Certification      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.                                   |

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|                               | DYNAMICS      RESEARCH CORPORATION                                   |
|------------------------------------|----------------------------------------------------------------------|
|                               | (Registrant)                                                         |
|                               |                                                                 |
|                               |                                                                 |
| Date:  May      12, 2008 | /s/      David Keleher                                               |
|                               | Senior      Vice President, Chief Financial Officer and Treasurer    |
|                               | (Principal      Financial Officer and Principal Accounting  Officer) |