UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

[ X ]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended December 31, 1997

                                       OR

[   ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission file number                   1-7348

                          DYNAMICS RESEARCH CORPORATION
               (Exact Name of Registrant as Specified in Its Charter)

  Massachusetts                                    04-2211809
  (State or Other Jurisdiction of       (I.R.S. Employer Identification No.)
  Incorporation or Organization)

           60 FRONTAGE ROAD
        ANDOVER, MASSACHUSETTS                         01810-5498
(Address of Principal Executive Offices)               (Zip Code)

     Registrant's telephone number, including area code: (978) 475-9090

         Securities registered pursuant to Section 12(b) of the Act:
                                          Name of Each Exchange on
     Title of Each Class                      Which Registered
            NONE                               NOT APPLICABLE

         Securities registered pursuant to Section 12(g) of the Act:
                        COMMON STOCK, $.10 Par Value
                              (Title of Class)



Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes   X   No      .


Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.   [ ]

As of March 20, 1997, the aggregate market value of Common
Stock held by nonaffiliates of the Registrant was $62,042,861 and the number
of shares of Common Stock, $.10 par value, of the Registrant outstanding was
6,322,521.

                   Documents Incorporated By Reference

Portions of the 1997 Annual Report to Shareholders are incorporated by
reference in Parts I and II.  Portions of the Registrant's Proxy
Statement for the 1998 Annual Meeting of Shareholders are incorporated
by reference in Part III.

The Exhibit Index is on pages 24 and 25.


                      DYNAMICS RESEARCH CORPORATION
                               Form 10-K
              For the Fiscal Year Ended December 31, 1997

Part I                                                        Page

   Item  1.     Business                                        4

         2.     Properties                                     11

         3.     Legal Proceedings                              12

         4.     Submission of Matters to a Vote of
                 Security Holders                              12

         4A.    Executive Officers of the Registrant           12

Part II

         5.     Market for Registrant's Common Equity and
                 Related Stockholder Matters                   13

         6.     Selected Financial Data                        13

         7.     Management's Discussion and Analysis of
                 Financial Condition and Results
                 of Operations                                 13

         8.     Financial Statements and Supplementary
                 Data                                          13

         9.     Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure        14

Part III

         10.    Directors and Executive Officers of the
                 Registrant                                    15

         11.    Executive Compensation                         15

         12.    Security Ownership of Certain Beneficial
                 Owners and Management                         15

         13.    Certain Relationships and Related
                 Transactions                                  15

Part IV

         14.    Exhibits, Financial Statement Schedules,
                 and Reports on Form 8-K                       16

PART I

Item 1. Business

Dynamics Research Corporation (referred to herein as DRC or the Company)
was organized in 1955 under the laws of the Commonwealth of
Massachusetts. The Company comprises four divisions:  Systems, Test
Equipment, Metrigraphics and Encoder.

The Company's Systems Division is principally engaged in providing a
broad range of technical services, including information systems
development and operation, engineering, and management support services.
DRC's Test Equipment Division provides a variety of research,
engineering, and manufacturing services.  The Company's Systems and Test
Equipment Division provide services to United States Department of
Defense (DoD) organizations, other U.S. and state government agencies,
and commercial entities. DRC's Metrigraphics and Encoder Divisions form
the Company's Precision Products Group.  These divisions design,
manufacture, and sell digital instruments and precision components that
are primarily used in computer-controlled systems.  The Precision
Products Group operates principally in the commercial marketplace.

Information Systems Development and Operation

DRC's Systems Division provides systems analysis, integration, and
software design and development services.  The Division's information
technology offerings also include installation, systems operation, and
maintenance.

Systems built by DRC are used for aircraft maintenance and parts
tracking; supply chain management; training requirements; and for
managing state government health and human services commitments.

The Company's major DoD information systems programs are often referred
to as logistics information systems. These DRC-developed systems are
product management information systems that manage information on a
product's inventory requirements and control, maintenance and repair,
warranty analysis, supply, and distribution.

For nearly 30 years, the Company has assisted the U.S. Navy's Fleet
Ballistic Missile program office in the design, development, and
operation of inertial systems.  The Company has extensive experience
with the Polaris, Poseidon, and Trident missile guidance systems and
submarine inertial navigation systems. The Company develops and
maintains performance, reliability, and logistics databases for the
inertial guidance instruments housed in those systems. These databases
track detailed information on thousands of component parts comprising
the systems. In connection with these databases, the Company has
successfully integrated customer workflow and database activity
information with internet technology.  This information is used by the
customer for a wide range of operating management tasks and decision
making.

During 1997, the Company continued to participate in the development of
the U.S. Air Force's Integrated Maintenance Data System (IMDS). DRC's
IMDS involvement encompasses system interface design, data conversion,
and contractor logistics support.  IMDS is intended to replace a number
of existing legacy systems including the Tactical Interim CAMS and REMIS
Reporting System (TICARRS).  TICARRS is a system that DRC supported for
16 years with design, development, implementation, and operation.

The DRC-developed Weapon Systems Management Information System (WSMIS)
assesses the "health" and capability of the U.S. Air Force's weapon
systems to meet wartime objectives. For the past sixteen years DRC has
served as the overall functional integrator of WSMIS and the developer
of most WSMIS modules. The Company currently provides WSMIS operational
and software development support.  As a decision-support tool for
assessing the impacts of logistics status on potential wartime
capabilities, WSMIS computes inventory requirements, purchasing needs,
and logistics capability assessments for complex, high-priced aircraft
spare parts needed to meet aircraft availability requirements.

The Company is currently maintaining other decision support systems for
solving logistics problems.  DRC's Execution and Prioritization of
Repair Support System (EXPRESS) is one of the primary systems supporting
the Air Force Material Command's Depot Repair Enhancement Program (DREP)
processes. EXPRESS identifies parts requirements, prioritizes needs,
evaluates the feasibility of repair, aids in driving the right items
into repair, and assists in the distribution of the repaired items.
Additional support to the DREP initiative to further improve depot-
repair processes is being provided by the DRC-developed Supportability
Analysis and Visibility (SAV) module. This modernized system will
provide key information on problem indicators, locations of assets, key
parts data that identify support problems, and a U.S. Air Force
"scorecard" to provide a common reference on the status of any given
item.

During 1997, the Company implemented a distributed computer-based
Statewide Automated Child Welfare Information System (SACWIS) for the
State of New Hampshire.  This system manages child welfare cases handled
by the State of New Hampshire's Department of Health and Human Services.
The State of New Hampshire then awarded DRC a $4.5 million contract
extension to provide additional functional and technical enhancements to
the SACWIS system.

In February 1997, DRC was awarded a $36.0 million, contract to design,
deliver, install, and maintain a statewide IT infrastructure that
supports the Ohio Child Support Enforcement Tracking System (SETS).
The information technology infrastructure the Company is developing
helps automate the work of more than 4,250 Child Support Enforcement
workers throughout all of Ohio's 88 counties.   In November 1997, the
State of Ohio awarded the Company an $18.9 million contract for
additional computer network infrastructure and related services.  DRC
continues to provide computer hardware and software; site preparation
and installation; and technical support services for the SACWIS and Ohio
Works First system-systems that support Ohio's welfare reform
initiatives.

In December 1997, DRC also received a $28.3 million, three-year contract
from the State of Colorado, Department of Human Services to serve as a
prime contractor for its Children, Youth and Families project.  The
contract is a result of a competitive procurement for the design,
development, and implementation of a child welfare and youth corrections
system consisting of software, training, and a state-wide computer
network infrastructure.  The contract includes options for four
additional years of system maintenance and support valued at $14.8
million.

The Company continues to provide the U.S. Department of Treasury with
information technology services for the Internal Revenue Service and
other Treasury departments.  Most of the activity under this contract
came from three large delivery orders involving:

1)   Year 2000 software and system certification
2)   Enforcement Revenue Information System quality systems testing and
      quality assurance
3)   Compliance Research Information System and associated system
      support through project management, network design, and software
      development

Critical to the development of information systems is the Company's
software development process and related tools. The Company's approach
to mission-critical software stresses principles of continuous software
quality evaluation and increased visibility throughout the software
development life cycle. To this end, DRC has achieved Level-2
certification under the standards of the Software Engineering Institute
and is actively pursuing Level-3 certification.

Engineering and Management Support Services

Under various DoD contracts, the Company has performed a variety of
services for its U.S. Government customers to assist them in planning
and managing their large system development programs. The business area
utilizes a wide range of the Company's technical and management skills
to plan, analyze, design, test, support, train, maintain, and dispose of
a variety of complex systems. Systems include radar, C3I, missile,
aircraft, information, software, and munitions.

The Company provides support at all stages of the system's life cycle.
In response to emerging requirements, the Company helps its federal
Government customers define, develop, and initiate new programs.  The
Company also helps customers obtain program approval, conduct strategic
planning, and evaluate proposals from private contractors. After prime
contract awards, the Company helps monitor contractor activities,
evaluate progress, and measure performance against program requirements.
The System Engineering and Technical Assistance (SETA) Group's products
and services include Computer-Based Training, systems integration, and
Business Process Improvement/Reengineering.  Under a variety of
contracts, DRC supports the U.S. Air Force at bases such as Hanscom Air
Force Base, Scott Air Force Base, Langley Air Force Base, Maxwell Air
Force Base, Gunter Annex, and Peterson Air Force Base.

DRC's SETA activities support numerous programs and activities including:

    Theater Battle Management Core Systems
    Joint Transportation CIM Center
    Air Mobility Command Enterprise Architecture
    MILSTAR
    Mission Planning Systems
    Airborne Warning and Control System (AWACS)
    Joint Surveillance Target Attack Radar System (JSTARS)
    Air Force Research Lab laboratory and facilities operations
    Cheyenne Mountain Upgrade
    Command and Control foreign military sales


In 1995 the U.S. Air Force awarded DRC a five-year contract for
Technology Task-Order Engineering Services (TTOES).  Originally valued
at up to $23.7 million, in 1997 the contract  ceiling was increased to
$31.2 million.  DRC has provided engineering, logistics, and software
support on programs such as the B-1B, the B-2, the B-52, the KC-135, and
the E-3A aircraft repair, maintenance, and upgrade programs. From its
origin at the Oklahoma City Air Logistics Center (ALC), DRC has expanded
its TTOES task orders to include work at other ALCS located at Warner
Robins, GA; Ogden UT; and San Antonio, TX.  Recent tasking has centered
on providing support to Air Force reengineering and business process
improvement initiatives at all of these ALCs.

Since 1993 DRC has provided the US Army Aviation and Missile Command
(AMCOM) with specialized studies and analyses in aviation/missile system
development, acquisition and sustainment.  The current $33.0 million
technical support prime contract supports a broad range of helicopter
and missile systems in varying life cycle stages.  Additionally, DRC
supports seven other technical contracts based in Huntsville, Alabama
with acquisition logistics, systems engineering, and other related
program management services.

DRC continues to provide logistics modeling and analysis for the U.S.
Air Force Air Staff as well as for the Joint Strike Fighter program.
Since 1987 the Company has provided acquisition logistics services to
the Ballistic Missile Defense Organization.

Combining its expertise in weapon system acquisition processes with its
expertise in systems analysis, design, training and simulation, and
human factors DRC performs human-systems integration and force analysis.
Since 1987, DRC has provided force analysis support to the Army Research
Laboratory.  These activities are focused on developing tools that
support analyzing soldier and system effectiveness, identifying and
assessing force improvement options (doctrine, training, leader
development, organization, and material), and ensuring soldier
considerations are addressed in force improvements. Three years ago, DRC
won a $22.5 million dollar, five year contract from the U.S. Army
Research Laboratory to provide analysis, system development and support
in several functional areas which include assessment of manpower,
personnel, and training issues; analysis of soldier systems performance;
and integration of methods and databases for use by system designers.
In addition, DRC developed methods for analyzing training requirements
and standardizing training across all branches of the military services.

The Company is in its second year of a U.S. Army four-year, contract
valued at approximately $13.0 million, to implement, apply, and manage
DRC-developed teamwork training principles to improve performance in
high-pressure environments. The project focus is on improving teamwork
in emergency-room settings at more than 15 hospitals (both civilian and
military).

As part of a five-year subcontract, DRC provided crew resource
management training to the US Air Force Air Combat Command.   In 1997,
the contract  was expanded to include the US Air Forces in Europe.  The
Air Force has funded the base year and three option years reflecting a
value to DRC in excess of $2.5 million.

DRC is the developer of the Training System Requirements Analysis (TSRA)
Tools, which are a set of  computer programs designed to help
instructional designers perform the initial phases of the Instructional
Systems Development (ISD) process.  The TSRA Tools have been developed
throughout the Naval Air Warfare Center Training Systems Division
(NAWCTSD) and are widely used throughout the Department of Defense by
government and contractor organizations.  The market for DRC's TSRA
Tools has expanded outside the military to include the Federal Aviation
Administration and  National Mine Health and Safety Academy.

As a subcontractor to Lockhead Martin, DRC is supporting the U.S. Army's
Warfighter 2000 Simulation (WARSIM).  DRC services include conceptual
modeling, Manpower and Personnel Analysis and safety engineering efforts
associated with WARSIM.  The Company is also providing system
engineering and software engineering support to the Integrated
Development Team.

DRC is also a subcontractor to Lockheed Martin for the Close Combat
Tactical Trainer (CCTT) program.  CCTT simulates Army tank and
mechanized infantry units from vehicle crews to the battalion level.
CCTT uses distributed, interactive simulation technology to provide a
"virtual" training environment.  DRC conducts all manpower and personnel
integration activities associated with the CCTT.  DRC is also playing a
similar role in a subcontract to Lockheed Martin on the United Kingdom
Combined Arms Tactical Trainer, the UK's version of the CCTT.

DRC is a subcontractor to Raytheon on the U.S. Air Force National Air
and Space Model (NASM).  The Company is developing conceptual models and
collecting data on mission space objects and processes.

The Company continues to provide independent analysis and monitoring of
submarine-based, inertial guidance systems and electronic modules for
the U.S. Navy's Fleet Ballistic Missile Program Office. DRC's Inertial
Instrument Test Laboratory, is equipped for full-scale performance
testing of navigational quality inertial instruments.

DRC's Test Equipment Division provides research, engineering, and
manufacturing services to the DoD and commercial customers. In the DoD
market, the Test Equipment Division designs, constructs, installs,
trains, and supports test equipment used in the U.S. Navy Trident
program. In addition, DRC is  involved in the ongoing design efforts for
the U.S. Navy's advanced submarine programs, including their ballistic
submarine system scheduled for activation in the 21st century.  The
Division also developed a scenario generator and training device for the
Joint-Tactical Information Distribution System (JTIDS). DRC's device,
the JTIDs Training Device (JTD), will be used by the U.S. Air Force and
the U.S. Navy to train personnel in field-usage of the JTIDS terminals.

In 1996, DRC obtained an exclusive license from SBC Communications to
develop and market "Sleuth," its telephone fraud-detection control
system. Currently, five regional bell operating companies (RBOCs)
located throughout the United States are using "Sleuth" to combat
telephone fraud. Recently, the Division upgraded "Sleuth" to broaden
the types of suspicious telephone calling patterns that can be detected.

The Division is also involved in the design of a closed-loop system used
in the field of parameter control in semiconductor manufacture. This
process is being developed along with other companies under the auspices
of the U.S. Navy in the San Diego, California, Space and Naval Warfare
Systems Center.  DRC is also performing computer-aided, semiconductor
circuit analysis for a number of commercial companies. In cooperation
with Rockwell Collins Company, the Division manufactures a highly
accurate Global Position System (GPS) receiver.

DRC's Precision Products Group

The commercial operations of DRC's Precision Products Group are
segmented in two divisions:

DRC's Encoder Division designs, manufactures, and markets a line of
digital encoders that convert analog motion and position information
into digital signals used in a wide variety of industrial products and
systems which include: machine tools, robotics, engine fuel-control
systems, packaging equipment, and pick-and-place machines.  DRC's
digital encoding devices are essential elements of today's
electronically controlled systems and equipment.

The Metrigraphics Division uses photolithographic processes to
manufacture optical discs, scales and reticles that are used for
precision measurement.  Metrigraphics also uses various metal deposition
processes, including electroplating and electroforming, to produce a
variety of precision components.  Products include printheads and
oriface plates used in electronic printers and in circuitry used in
certain medical instruments.  Metrigraphics' superior ability to design
and manufacture components and hold critical tolerances is an important
driver for a wide range of high-technology applications.

Metrigraphics' largest market is currently for nozzles used in inkjet
printer cartridges. In addition to its electroform parts for printers
and medical instruments, Metrigraphics manufactures precision glass
parts for computer peripherals, factory automation equipment, electronic
instrumentation, and semiconductor equipment.   The Company has
completed a $6.0 million capital program, including state-of-the-art
automated production and inspection equipment, to support high volume
customers.

United States Government Contracts

    Contracts for the Company's defense services are obtained by
marketing and technical personnel employed by the Company.  The
Company's other products are sold by sales personnel employed by the
Company and sales representatives.

    During 1997, the Company's revenues from contracts with the
DoD, either as prime contractor or subcontractor, accounted for approximately
66% of the Company's total revenues.  The Company's government contracts fall
into one of three categories: (1) fixed price, (2) time and materials, and
(3) cost plus fixed fee.  Under a fixed price contract, the customer pays an
agreed upon price for the Company's services or products, and the Company
bears the risk that increased or unexpected costs may reduce its profits or
cause it to incur a loss.  Conversely, to the extent the Company incurs
actual costs below anticipated costs on these contracts, the Company could
realize greater profits.  Under a time and materials contract, the government
pays the Company a fixed hourly rate intended to cover salary costs and
related indirect expenses plus a certain profit margin. Under a cost
plus fixed fee contract, the government reimburses the Company for its
allowable direct expenses and allowable and allocable indirect costs and
pays a negotiated fee.  In 1997, approximately 65% of the Company's
government contracts revenue was under fixed price or time and
material contracts, while approximately 35% of revenue was under
costs plus fixed fee contracts.

    During 1997, the Company's U.S. government business consisted of
approximately 115 separate contracts on 60 different programs.  The
Company's contracts with the government are generally subject to
termination at the convenience of the government; however, the Company
would be reimbursed for its allowable costs to the time of termination
and would be paid a proportionate amount of the stipulated profit
attributable to the work actually performed.  Although government
contracts may extend for several years, they are generally funded on an
annual basis and are subject to reduction or cancellation in the event
of changes in government requirements or budgetary concerns.  If the
U.S. government significantly curtails expenditures for research,
development and consulting activities, such curtailment might have an
adverse impact on the Company's sales and earnings.

Backlog

    At December 31, 1997, the Company's backlog of unfilled orders
was approximately $110.0 million compared with $73.2 at December 28, 1996.
The Company expects that substantially all of its backlog on December 31,
1997 will be filled during the year ending December 31, 1998.  The Company
has a number of multi-year contracts with agencies of the U.S. Government on
which actual funding generally occurs on an annual basis.  The Company's
business does not have seasonal characteristics but a portion of its funded
backlog is based on annual purchase contracts, and the amount of funded
backlog as of any date can be affected by the timing of order receipts and
deliveries thereunder.

Competition

    The Company competes with both domestic and foreign firms, including
larger diversified companies and smaller specialized firms.  The U.S.
government's own in-house capabilities are also, in effect, competitors
of the Company because various agencies perform certain types of
services which might otherwise be performed by the Company.  The
principal competitive factors for defense services are price,
performance, technical competence and reliability.  In addition, in the
commercial business, the Company also competes with other
manufacturers of encoders, electroform vendors and photolithographic
suppliers of precision measurement scales.  The principal competitive
factors effecting the precision components manufacturing business are
price, product quality and custom engineering to meet customer system
requirements.

Research and Development

    The Company expended approximately $1.4 million (inclusive of overhead
and other indirect costs) on new product and service development during the
year ended December 31, 1997, as compared to expenditures of $2.7 million
during 1996 and $1.9 million during 1995.

Raw Materials

    Raw materials and components are purchased from a large number of
independent sources and are generally available in sufficient quantities
to meet current requirements.

Environmental Matters

    Compliance with federal, state and local provisions relating to the
protection of the environment has not had and is not expected to have a
material effect upon the capital expenditures, earnings or competitive
position of the Company.

Employees

    At December 31, 1997, the Company had approximately 1,455 employees.

Proprietary Information

    Patents, trademarks and copyrights are not materially important to
the business of the Company.  The United States Government has certain
proprietary rights in processes and data developed by the Company in its
performance of government contracts.

Item 2.  Properties

    The Company leases offices and other facilities, totaling
approximately 330,000 square feet, which are utilized for its
defense services, manufacturing and warehousing operations as well as
its marketing and engineering offices.  The Company has manufacturing
and office space in Wilmington, Massachusetts under three leases
totaling 113,000 square feet, expiring in 2000, with options to
the year 2005.  The remaining leased facilities consist of offices in
29 locations across the United States.  The Company owns a 135,000
square foot facility in Andover, Massachusetts that is utilized for its
defense service operations and corporate administrative offices.

    The Company's total rental cost for 1997 was $2.5 million.

    The Company believes its properties are adequate for its present
needs.  See Note 6 to the Consolidated Financial Statements included
in the Company's 1997 Annual Report to Shareholders for a description
of the Company's lease obligations.

Item 3.  Legal Proceedings

    The Company is not a party to any material litigation.

Item 4.  Submission of Matters to a Vote of Security Holders

    No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

Item 4A.  Executive Officers of the Registrant

    The following is a list of the names and ages of the executive
officers of the Company indicating all positions and offices held by
each person and each person's principal occupations or employment during
the past five years.  The executive officers were elected by the Board
of Directors and will hold office until the next annual election of
officers and their successors are elected and qualified, or until their
earlier resignation or removal by the Board of Directors.  There are no
family relationships between any executive officers and directors.


                              Age                  Position

John S. Anderegg, Jr.         74             Chairman and Director

Albert Rand                   71      President, and Chief Executive Officer
                                                  and Director

John L. Wilkinson             58     Vice President, Human Resources and Clerk

Douglas R. Potter             47            Vice President of Finance,
                                              Chief Financial Officer

    Each of the persons named above has served in the position indicated
for more than five years, with the exception of Douglas R. Potter.  Mr.
Potter was appointed Vice President of Finance and Chief Financial
Officer in November 1993.  Previously he was Vice President, Treasurer,
and Chief Financial Officer of SofTech, Inc. of Waltham, Massachusetts
from 1990 to 1993.


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

    The common stock of the Company is traded on the NASDAQ National Market
under the symbol (DRCO).

    The high and low bid prices for the quarters in 1996 and 1997
and the number of holders of record of the Company's common stock are
described in the Company's Annual Report to Shareholders for 1997
under the caption "Stock Prices" and "Number of Shareholders," and such
information is incorporated herein by reference.

    In September 1984, the Board of Directors indicated its intention
not to declare cash dividends to preserve cash for the future growth and
development of the Company. The Company did not declare any cash
dividends between 1984 and 1997 and does not anticipate doing so for the
foreseeable future.

Item 6.  Selected Financial Data

    The section entitled, "Five Year Summary of Selected Financial Data"
in the Company's Annual Report to Shareholders for 1997 is incorporated
herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

    The section entitled, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual
Report to Shareholders for 1997 is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

    The following financial statements are filed as part of this Annual
    Report:

     Report of Independent Public Accountants

     Consolidated Balance Sheets at December 31, 1997, December
     28, 1996 and December 30, 1995

     Consolidated Statements of Operations for the three years ended
     December 31, 1997

     Consolidated Statements of Shareholders' Investment for the three
     years ended December 31, 1997

     Consolidated Statements of Cash Flows for the three years ended
     December 31, 1997

     Notes to Consolidated Financial Statements

    (The consolidated financial statements and related notes listed
above are incorporated by reference to the Company's Annual Report to
Shareholders for the year 1997.)

     Report of Independent Public Accountants on Schedules to
        Consolidated Financial Statements

     Schedule VIII    - Valuation and Qualifying Accounts for the three
        years ended December 31, 1997

     The foregoing schedule is included as part of Item 14 of this
        Annual Report on Form 10-K

    All other financial statements and schedules have been omitted
because the information required to be submitted has been included in
the financial statements and related notes or they are either not
applicable or not required under the rules of Regulation S-X.

    Quarterly financial data presented on page 16, and Management's
Discussion and Analysis of  Financial Condition and Results of
Operations presented on pages 17-19, of the Company's Annual Report
to Shareholders for the year 1997, are also incorporated herein by
reference.  With the exception of the portions listed in the above
index, the Annual Report referred to above is not to be deemed filed as
part of the financial statements.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

    Not applicable.


PART III


Item 10.  Directors and Executive Officers of the Registrant

    Information with respect to Directors of the Registrant in the
section entitled "Election of Directors" in the Company's definitive
proxy Statement for the 199765 Annual Meeting of Stockholders, which
will be filed with the Securities and Exchange Commission within 120
days after the close of the fiscal year ended December 31, 1997,
is incorporated herein by reference.

    Information relating to the Executive Officers of the Company is
included in Item 4A of Part I of this Form 10K.

Item 11.  Executive Compensation

    Information called for by this item is incorporated by reference
from the section entitled "Compensation and Related Matters" in the
Company's definitive Proxy Statement for the 1997 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended
December 31, 1997.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

    Information called for by this item is incorporated by reference
from the sections entitled "Common Stock Ownership of Certain Beneficial
Owners and Management" in the Company's definitive Proxy Statement for
the 19976 Annual Meeting of Stockholders, which will be filed with the
Securities and Exchange Commission within 120 days after the close of
the fiscal year ended December 31, 1997.

Item 13.  Certain Relationships and Related Transactions

    Not applicable.






PART IV


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

    (a)   (1) and (2) Financial Statements and Schedules - See Item 8.

    (a)   (3) Exhibits.  The exhibits that are filed with this Form
          10-K, or that are incorporated herein by reference, are set
          forth in the Exhibit Index, which appears in Part IV of this
          report on pages 24 and 25.

    (b)   Reports on Form 8-K.

          No reports on Form 8-K were filed by the Company during the
          last quarter of fiscal 1997.


             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
                    TO CONSOLIDATED FINANCIAL STATEMENTS


To Dynamics Research Corporation:

    We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Dynamics
Research Corporation's annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 20, 1998.  Our audit was made for the purpose of forming
an opinion on those statements taken as a whole.  The schedule listed in
the accompanying index is the responsibility of the company's management
and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial
statements.  This schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.



                                                  ARTHUR ANDERSEN LLP



Boston, Massachusetts,
February 20, 1998



                                                          Exhibit 99

IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS


The following factors, among others, could cause the Company's actual
results and performance to differ materially from those contained in
forward-looking statements made in this report and presented elsewhere
by or on behalf of the Company from time to time.

Uncertainties as to Department of Defense and Other Federal Agency Budgets

    The Company has historically derived a substantial portion of
its revenue from contracts and subcontracts with the U.S. Government,
and currently more than 66% of the Company's revenue is derived from
the Department of Defense business. During the past, the Company's defense
business has been adversely affected by significant changes in defense
spending.  Overall U.S. defense budgets have been declining, and the effects
of this general decline and attendant increased competition within the
consolidating defense industry is expected to continue.  Funding limitations
could result in a reduction, delay, or cancellation of existing or emerging
programs.  These factors, among others, have reduced the Company's revenue
and operating margins on its defense contracts in recent fiscal periods.
The Company anticipates that competition in all defense-related areas will
continue to be intense and that, accordingly, there will be continued
significant competition when the Company's defense contracts are rebid and
continued significant competitive pressure to lower prices, which may reduce
profitability in this area of the Company's business.  Any reduction in the
level or profitability of the Company's defense business, if not offset by
new commercial business or other business with the federal government, will
adversely affect the Company's business, financial condition and results
of operations.

    A significant portion of the Company's government contracts
are renewable on an annual basis, or are subject to the exercise of
contractual options.  Also, multi-year contracts often require funding
actions by the Government on an annual or more frequent basis.  As a
result, the Company's business could experience material adverse
consequences should the Government budget not include funds required to
sustain the programs under which DRC operates.

Government Contracting Risks

    A significant portion of the Company's government contracts
are of a time and materials nature, with fixed hourly rates that are
intended to cover salaries, benefits, other indirect costs of operating
the business and profit.  The pricing of such contracts is based upon
estimates of future costs and assumptions as to the aggregate volume of
business that the Company will perform in a certain business division or
other relevant unit.  For long term contracts, the Company must estimate
the costs necessary to complete the defined statement of work and
recognize revenues or losses in accordance with such estimates.
However, actual costs may vary materially from the estimates made from
time to time, necessitating adjustments to reported revenue and net
income.  Underestimates of the costs associated with a project would
adversely affect the Company's overall profitability and could have a
material adverse effect on the Company's business, financial condition
and results of operations.

    Governmental awards of contracts are subject to
regulations and procedures that permit formal protests by losing
bidders.  Such protests may result in significant delays in the
commencement of expected contractual effort, or the reversal of a
previous award decision, which could have a material adverse effect on
the Company's business, financial condition and results of operations.

     Because of the complexity and scheduling of contracting with
the government, from time to time costs are incurred in advance of
contractual funding by the government.  In some circumstances, such
costs may not be recovered in whole or in part under subsequent
government contractual actions.  Failure to collect such amounts may
have material adverse consequences on the Company's business, financial
condition and results of operations.

     Costs incurred in connection with government contracts are
generally subject to after-the-fact audits.  Such audits may result in
material disallowances, which could have an adverse effect on the
Company's  business, financial condition and results of operations.

     A substantial portion of the Company's government contracting
business is as a subcontractor.  In such circumstances, the Company
generally bears the risk that the prime contractor will meet its
performance obligations to the government under the prime contract and
that the prime contractor will have the financial capability to pay the
Company amounts due under the subcontract.  The inability of a prime
contractor to perform or make required payments could have a material
adverse effect on the Company's business, financial condition and
results of operations.

    The Government has the right to terminate contracts for
convenience.  In such a termination, the Company would generally recover
costs incurred up to termination, costs required to be incurred in
connection with the termination, and a portion of the fee earned
commensurate with the work performed to termination.  However,
significant adverse effects on the Company's indirect cost pools may not
be recoverable in connection with a termination for convenience.
Contracts with state and other governmental entities are subject to the
same or similar risks.

Dependence on Key Personnel

    The Company is dependent on its key technical personnel.  In
addition, certain technical contributors may have specific knowledge and
experience related to various Government customer operations that would
be difficult to replace in a timely fashion.  The loss of the services
of key personnel could have a material adverse effect on the Company's
ability to perform required services under certain contracts, or to
retain such business after the expiration of the current contract, or to
win new business where certain personnel have been identified as key
personnel in the proposal, any of which could have a material adverse
effect on the Company's business, financial condition and results of
operations.


Competition

    The government contracting business is subject to intense
competition, both technical and pricing, from numerous companies, many
of which have significantly greater financial, technical and marketing
resources than the Company.

    Competition in the market for the Company's commercial
products is also intense.  There is a significant lead time for
developing such business, and it involves significant capital investment
including development of prototypes and investment in manufacturing
equipment.  The Company's precision products business has a number of
competitors, many of which have significantly greater financial,
technical and marketing resources than the Company.

Risks Associates with New Markets and New Products

    In its efforts to enter new markets, including government
agencies other than the Department of Defense and commercial markets,
the Company faces significant competition from other companies that have
prior experience with such potential customers as well as significantly
greater financial, technical and marketing resources than the Company.
As a result, the Company's efforts to enter such new markets may be
unsuccessful or may not achieve the level of success sought by the
Company.

    The Company has announced software products for commercial
markets.  There is no assurance that the Company's software products
will meet with market acceptance or that the Company will be able to
compete in the development and distribution of such products with
competitors that have significantly greater resources and experience.

Concentration of Customers

    Within the Department of Defense, individual services and
program offices account for a significant portion of the Company's
government business.  Two customers account for a significant portion
of the revenue of the Company's commercial manufacturing divisions.  No
assurance can be provided that any of these customers will continue as
such or will continue at current levels.  A decrease in orders from
these customers would have an adverse effect on the Company's
profitability, and the loss of any large customer could have a material
adverse effect on the Company's business, financial condition and
results of operations.

Risk of Product Claims

    The Company's precision manufactured products are generally
designed to operate as important components of complex systems or
products, and defects in DRC products could cause the customer's product
or systems to fail or perform below expectations.  Like other
manufacturing companies, the Company may be subject to claims for
alleged performance issues relating to its products.  There can be no
assurance any such claims, if made, will not have a material adverse
effect on the Company's business, financial conditions or results of
operations.



Risk of Economic Events Effecting the Company's Business Segments

    Certain of the Company's precision products are components of
commercial products. Factors that affect the production and demand for
such products, including economic events, competition, technological
change and productions stoppages, could adversely affect demand for the
Company's products.  Certain of the Company's products are incorporated
into capital equipment, such as machine tools and other automated
production equipment, used in the manufacture of other products.  As a
result, this portion of the Company's business may be subject to
fluctuations in the manufacturing sector of the overall economy.  An
economic recession could have a material adverse effect on the rate of
orders received by the commercial divisions.  Significantly lower
production volumes resulting in under-utilization of the Company's
manufacturing would adversely affectimpact the Company's profitability.

Technological Change

    The Company's knowledge base and skills in the Government
contracting area are sophisticated and involve areas in which there have
been and are expected to be significant technological change.  There is
no assurance that the Company will continue to be able to offer services
that satisfy its customers' requirements at a competitive price.  Many
of the Company's products are incorporated into sophisticated machinery,
equipment or electronic systems.  Technological changes may be
incorporated into competitor's products that may adversely affect the
market for the Company's products.  Further, there can be no assurance
that the Company's research and product development efforts will be
successful and result in new or improved products that may be required
to sustain the Company's market position.

Uncertainty of Future Financing

    Although the Company has no immediate plans to raise
additional capital, it may in the future need to raise additional funds
through public or private debt or equity financings.  There can be no
assurance that any such funding will be available or of the terms or
timing of any such funding.


SIGNATURES

    Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  March 27, 1998

                                         DYNAMICS RESEARCH CORPORATION


                                    by:           /s/ Albert Rand
                                                Albert Rand, President
                                             (Principal Executive Officer)


    Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on the 27th of March, 1998.



     /s/ Albert Rand
         Albert Rand              Director, President, Chief Executive Officer


     /s/ Douglas R. Potter
         Douglas R. Potter        Vice President of Finance,
                                   Chief Financial Officer (Principal Financial
                                   and Accounting Officer)


     /s/ John S. Anderegg, Jr.
         John S. Anderegg, Jr.    Director, Chairman


     /s/ Francis J. Aguilar
         Dr. Francis J. Aguilar   Director


     /s/ Martin V. Joyce, Jr.
         Martin V. Joyce, Jr.     Director

     /s/ Kenneth F. Kames
         Kenneth F. Kames         Director


     /s/  James P. Mullins
          Gen. James P.Mullins    Director



                                 SCHEDULE VIII

                  DYNAMICS RESEARCH CORPORATION AND SUBSIDIARIES

                         VALUATION AND QUALIFYING ACCOUNTS

                    FOR THE THREE YEARS ENDED DECEMBER 31, 1997

                             (in thousands of dollars)

ALLOWANCE FOR DOUBTFUL ACCOUNTS AND SALES RETURNS



Balance, December 31, 1994                                $586
 Additions charged to expense                               (2)
 Write-off of uncollectible accounts, net                 (182)

Balance, December 30, 1995                                $402
 Additions charged to expense                              (54)
 Write-off of uncollectible accounts, net                   (8)


Balance, December 28, 1996                                $340
 Additions charged to expense                              (86)
 Write-off of uncollectible accounts, net                  (37)

Balance, December 31, 1997                                $217


                                EXHIBIT INDEX

3.0  Certificate of Incorporation and By-Laws.

     3.1   Restated Articles of Organization dated May 22, 1987.
        (Incorporated by reference to the Registrant's Form 10-Q for
        the quarter ended 6/13/87)

     3.2   By-Laws dated May 22, 1987.  (Incorporated by reference to
        the Registrant's Form 10-Q for the quarter ended 6/13/87)

4.0  Instruments defining the rights of security holders, including
      indentures.

     4.1   Common stock certificate.

     4.2   Preferred stock certificate.

     4.3   Rights Agreement dated as of July 14, 1988 ("Rights
           Agreement") between the Company and American Stock Transfer &
           Trust Company, as Rights Agent.  (Incorporated by reference to
           the Registrant's Form 8-K on July 14, 1988)

     4.4   Rights Agreement Amendment No. 1 dated as of September 6,
           1989.   (Incorporated by reference to the Registrant's Form 8-K
           on September 12, 1989)

10.0  Material Contracts

     10.1  Amended 1983 Stock Option Plan. (Incorporated by reference to
           the Registrant's Form 10-K for the year ended 12/27/87)

     10.2  1993 Equity Incentive Plan.  (Incorporated by reference to the
           Registrant's Form 10-Q for the quarter ended 6/12/93)

     10.3  1995 Stock Option Plan for non-employee directors.
           (Incorporated by reference to the Registrant's Form 10-K for
           the year ended 12/31/94)


     10.4  Form of Dynamics Research Corporation Indemnification
           Agreement for Directors.  (Incorporated by reference to the
           Registrant's Form 10-K for the year ended  12/28/91)

     10.5  Form of Dynamics Research Corporation Severance Agreement
           for Messrs. Anderegg and Rand.  (Incorporated by reference to the
           Registrant's Form 10-K for the year ended 12/28/91)

     10.6  Dynamics Research Corporation Deferred Compensation Plan for
           Non-Employee Directors.  (Incorporated by reference to the
           Registrant's Form 10-K for the year ended 12/28/91)

     10.7  Form of Consulting Agreement between Dynamics Research
           Corporation and Albert Rand.  (Incorporated by reference to the
           Registrant's Form 10-Q for the quarter ended 3/31/97)

     10.8  Form of Supplemental Retirement Pension Agreement between
           Dynamics Research Corporation and Albert Rand.  (Incorporated by
           reference to the Registrant's Form 10-Q for the quarter ended
           3/31/97)

     10.9  Credit Agreement dated October 2, 1997 between Dynamics
           Research Corporation and a syndicate of banks and financial
           institutions, with Brown Brothers Harriman and Company as the
           agent.

    10.10  Amended 1993 Equity Incentive Plan

    10.11  Amended 1995 Stock Option Plan for Non-Employee Directors

13.0  Annual Report to security holders, Form 10-Q or quarterly reports
      to security  holders.

     13.1  The Company's Annual Report to Shareholders for the
           year ended December 31, 1997 filed herewith with the
           exception of the information incorporated by reference in parts
           I, II and IV of this Form 10-K is not deemed to be filed as
           part of this report.

23.0  Consents of experts and counscel

     23.1  Consent of Independent Accountants (Arthur Andersen LLP)
           dated March 30, 1998 filed herewith.

99.0  Important Factors Regarding Forward-Looking Statements.