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|   |                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------|
| þ | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF 1934     |
|   |                                                                                                    |
|   | For      the fiscal year ended December 31, 2009                                                   |
|   | OR                                                                                                      |
|   |                                                                                                    |
| o      | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 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.) |
|                                                                                     |   |                                      |
| Two      Tech Drive, Andover, Massachusetts(Address      of Principal Executive Offices) |   | 01810-2434(Zip      Code)                 |

| Title      of each class                |   | Name      of exchange on which registered |
|-----------------------------------------|--------|-------------------------------------------|
| Common      Stock, $0.10 par value |   | The      NASDAQ Global Market             |

| Indicate      by check mark if the registrant is a well-known seasoned issuer, as      defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                                                                                                                              | Yes o     No þ                                                                               |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                 |
| Indicate      by check mark if the registrant is not required to file reports pursuant      to Section 13 or Section 15(d) of the Exchange    Act.                                                                                                                                                                                                                                                                                                                        | Yes o     No þ                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                 |
| 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 þ     No o                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                 |
| Indicate      by check mark whether the registrant has submitted electronically and      posted on its corporate Website, if any, every Interactive Data File      required to be submitted and posted pursuant to Rule 405 of Regulation S-T      during the preceding 12 months (or for such shorter period that      the registrant was required to submit and post such files). * The      registrant has not yet been phased into the interactive data      requirements. | Yes o     No o                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                 |
| 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.                                                                                       |                      þ |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                 |
| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, a non-accelerated filer or a smaller reporting      company.  See the definitions of “large accelerated filer”,      “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the      Exchange Act.  (Check one):                                                                                  |                                                                                                                                 |
| Large      accelerated filer o     Accelerated      filer þ     Non-accelerated      filer o     Smaller      reporting company o                                                                                                                                                                                                                                               |                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                 |
| Indicate      by check mark whether the registrant is a shell Company (as defined in      Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                                                                                                                                     | Yes o     No þ                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| The      aggregate market value of the registrant’s common stock, $0.10 par      value, held by nonaffiliates of the registrant as of June 30, 2009,      was $79,742,966 based on the reported last sale price per share of $10.01      on that date on the NASDAQ Global Market. As of February 28, 2010,      9,928,208 shares of the registrant’s common stock, $0.10 par value,      were outstanding.                                              |

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|   | (1) | Item      6. [page 30] Selected Financial Data for 2009, the line items Net cash      provided by operating activities from continuing operations and Capital      expenditures, and for 2005, the line item Income (loss) from discontinued      operations in the section Earnings (loss) per share -    Basic, |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Item      7. [page 42] Management’s Discussion and Analysis of Financial Condition      and Results of Operations, the average daily borrowings for 2009 in the      Liquidity and Capital Resources section under Financing      Activities |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Item      8. Financial Statements and SupplementaryData, |
|--------|-----|----------------------------------------------------------|

|   | (i) |   | Consolidated      Statement of Cash Flows for 2009 [page 50] , the subtotal line Net      cash used in continuing operations and the total line Net      cash used in investingactivities, |
|--------|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) |   | Note      12 under the subheading Restricted Stock Award Activity [page 73], the      date for the amount of total unrecognized compensation cost related to      restricted stock awards, |
|--------|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) |   | Note      14 under the subheading Major Customers [page 75], the percentages of      total revenue from U.S. Government agency customers in aggregate,      and |
|--------|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) |   | Note      16 under the Second Quarter for 2009 [page 78], the line Basic Income      (loss) from discontinued operations under Earnings per    share. |
|--------|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

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DYNAMICS RESEARCHCORPORATION

|                      | Page      |
|---------------------------|-----------|
|  PART I         |      |
|                      | ITEM      |   |
|                      |  1.  | Business | 2 |
|                      |  1A. | Risk Factors | 17 |
|                      |  1B. | Unresolved Staff Comments | 26 |
|                      |  2.  | Properties | 27 |
|                      |  3.  | Legal Proceedings | 27 |
|                      |  4.  | [Reserved] | 27 |
|  PART       II  |      |
|                      | ITEM      |   |
|                      |  5.  | Market for Registrant’s Common Equity, Related Stockholder      Matters and Issuer Purchases of Equity Securities | 28 |
|                      |  6.  | Selected Financial Data | 30 |
|                      |  7.  | Management’s Discussion and Analysis of Financial Condition      and Results of Operations | 33 |
|                      |  7A. | Quantitative and Qualitative Disclosures About Market      Risk | 43 |
|                      |  8.  | Financial Statements and Supplementary    Data | 45 |
|                      |  9.  | Changes in and Disagreements With Accountants on Accounting      and Financial Disclosure | 80 |
|                      |  9A. | Controls and Procedures | 80 |
|                      |  9B. | Other Information | 81 |
|  PART       III |      |
|                      | ITEM      |   |
|                      |  10. | Directors, Executive Officers and Corporate      Governance | 82 |
|                      |  11. | Executive Compensation | 83 |
|                      |  12. | Security Ownership of Certain Beneficial Owners and      Management and Related Stockholder Matters | 83 |
|                      |  13. | Certain Relationships and Related Transactions,      and  Director Independence | 83 |
|                      |  14. | Principal Accounting Fees and Services | 83 |
|  PART       IV  |      |
|                      | ITEM      |   |
|                      |  15. | Exhibits and Financial Statement    Schedules | 84 |

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ITEM 1. BUSINESS

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|   | •  | Government      Wide – GSA Alliant, Information Technology Services                       |
|--------|---------------|-------------------------------------------------------------------------------------------------|
|   | •       | Department      of Homeland Security – EAGLE Category 5, Management    Services           |
|   | •  | Department      of Homeland Security – PMSS, Professional Services                        |
|   | •  | Air      Force Depot – DESP II, Engineering Services                                      |
|   | •  | Army/Navy/Marine      Corps – LMSS, Logistics Services                                    |
|   | •  | Office      of Personnel Management – TMA, Human Resource Services                        |
|   | •  | Army      Training and Doctrine Command – STOC II, Training, Modeling and      Simulation |
|   | •  | Military      Health Care – TEAMS, Professional and Management  Services                  |

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ITEM 1A. RISK FACTORS

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|   | •  | decreases      in spending by agencies or programs we support;                                                     |
|--------|---------------|--------------------------------------------------------------------------------------------------------------------|
|   | •  | increased      allocation of federal contracts to small minority owned or disadvantaged      businesses;           |
|   | •  | replacement      of professional services contractors with federal employees (i.e.,      in-sourcing);             |
|   | •       | federal      government shutdowns due to weather, security threats, lack of budget      funding, or other reasons; |
|   | •       | delays      in payment of our invoices due to policy changes or problems with      government information systems; |
|   | •       | failure      of Congress to timely pass sufficient appropriations to fund our      programs;                       |
|   | •       | diversion      of funds to pay for international conflicts or reconstruction;      or                              |
|   | •       | DoD      Base realignment and closures.                                                                            |

|   | •  | adequately      estimate the resources required to complete a project;                      |
|--------|---------------|---------------------------------------------------------------------------------------------|
|   | •  | properly      determine the scope of an engagement; or                                 |
|   | •  | complete      our contractual obligation in a manner consistent with the project      plan. |

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|         | • | terminate      existing contracts for convenience, as well as for  default;                                                                                                                                                                                                            |
|--------------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | • | reduce      orders under, or otherwise modify contracts or    subcontracts;                                                                                                                                                                                                            |
|    | • | cancel      multi-year contracts and related orders if funds for contract performance      for any subsequent year become unavailable;                                                                                                                                                 |
|    | • | decline      to exercise an option to renew a multi-year contract;                                                                                                                                                                                                                     |
|    | • | suspend      or debar us from doing business with the federal government or with a      governmental agency;                                                                                                                                                                           |
|    | • | prohibit      future procurement awards with a particular agency as a result of a      finding of an organizational conflict of interest based upon prior related      work performed for the agency that would give a contractor an unfair      advantage over competing contractors; |
|    | • | subject      the award of contracts to protest by competitors, which may require the      contracting federal agency or department to suspend our performance      pending the outcome of the protest;                                                                                 |
|    | • | claim      rights in products and systems produced by us;  and                                                                                                                                                                                                                         |

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|         | • | lose      revenues due to adverse customer reaction;                                                                                       |
|--------------|---------|--------------------------------------------------------------------------------------------------------------------------------------------|
|    | • | be      required to provide additional services to a customer at no      charge;                                                           |
|    | • | receive      negative publicity that could damage our reputation and adversely affect      our ability to attract or retain customers; and |
|    | • | suffer      claims for substantial damages againstus.                                                                                      |

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|         | • | the      Federal Acquisition Regulation, which comprehensively regulates the      formation, administration and performance of federal government      contracts;                                                         |
|--------------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | • | the      Truth in Negotiations Act, which requires certification and disclosure of      all cost and pricing data in connection with contract      negotiations;                                                          |
|    | • | the      Cost Accounting Standards and Cost Principles, which impose accounting      requirements that govern our right to reimbursement under certain      cost-based federal government contracts;                      |
|    | • | laws,      regulations and executive orders restricting the use and dissemination of      information classified for national security purposes and the export of      certain products, services and technical data; and |
|    | • | U.S      export controls, which apply when we engage in international      work.                                                                                                                                          |

|         | • | termination      of contracts;                                                          |
|--------------|---------|-----------------------------------------------------------------------------------------|
|    | • | forfeiture      of profits;                                                             |
|    | • | cost      associated with triggering of price reduction clauses;                        |
|    | • | suspension      of payments;                                                            |
|    | • | fines;      and                                                                         |
|    | • | suspension      or debarment from doing business with federal government      agencies. |

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|   | •  | the      number, size and timing of client projects commenced and completed during      a quarter; |
|--------|---------------|----------------------------------------------------------------------------------------------------|
|   | •  | contract      wins and losses;                                                                     |
|   | •  | changes      to existing contracts made by our customers;                                          |
|   | •  | bid      and proposal efforts undertaken;                                                          |
|   | •  | progress      on fixed-price projects during a given quarter;                                      |
|   | •  | employee      productivity and hiring, attrition and utilization  rates;                           |
|   | •  | rapid      changes in demand from our precision manufacturing    customers;                        |
|   | •  | accuracy      of estimates of resources required to complete ongoing      projects;                |
|   | •  | the      trend in interest rates; and                                                         |
|   | •  | general      economic conditions.                                                                  |

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|   | •  | the      difficulty of assimilating the acquired operations and      personnel;                                                                             |
|--------|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | •  | the      potential disruption of our ongoing business and diversion of resources      and management time;                                                  |
|   | •  | the      potential failure to retain key personnel of the acquired      business;                                                                           |
|   | •  | the      difficulty of integrating systems, operations and      cultures; and                                                                          |
|   | •  | the      potential impairment of relationships with customers as a result of      changes in management or otherwise arising out of such      transactions. |

ITEM 1B. UNRESOLVED STAFF COMMENTS

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ITEM 2.  PROPERTIES

ITEM 3.  LEGAL PROCEEDINGS

ITEM 4.  [RESERVED]

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|   |
|--------|

| ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY,      RELATED STOCKHOLDER MATTERS AND ISSURER PURCHASES OF EQUITY      SECURITIES |
|--------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | High   |   |   | Low    |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
|  Fiscal      year ended December 31, 2009 |   |   |   |   |   |   |
|  First      quarter                            |   | $      | 9.00   |   |   | $      | 5.86 |   |
|  Second      quarter                           |   | $      | 10.61  |   |   | $      | 6.80 |   |
|  Third      quarter                            |   | $      | 14.32  |   |   | $      | 10.01 |   |
|  Fourth      quarter                           |   | $      | 13.80  |   |   | $      | 9.36 |   |
|                                                |   |   |   |   |   |   |   |   |
|  Fiscal      year ended December 31, 2008 |   |   |   |   |   |   |   |   |
|  First      quarter                            |   | $      | 11.30  |   |   | $      | 8.72 |   |
|  Second      quarter                           |   | $      | 10.75  |   |   | $      | 9.25 |   |
|  Third      quarter                            |   | $      | 10.50  |   |   | $      | 7.58 |   |
|  Fourth      quarter                           |   | $      | 9.04   |   |   | $      | 5.00 |   |

|                                                  |   |               |    |   |          |   |   |            |   |   | Approximate        |   |
|-------------------------------------------------------|--------|--------------------|---------|--------|---------------|--------|--------|-----------------|--------|--------|--------------------|--------|
|                                                  |   |               |    |   |          |   |   |            |   |   | Dollar             |   |
|                                                  |   |               |    |   |          |   |   | Total           |   |   | Value              |   |
|                                                  |   |               |    |   |          |   |   | Number          |   |   | of Shares     |   |
|                                                  |   |               |    |   |          |   |   | of      Shares  |   |   | that      May      |   |
|                                                  |   |               |    |   |          |   |   | Purchased       |   |   | Yet      Be        |   |
|                                                  |   |               |    |   | Average       |   |   | as      Part of |   |   | Purchased          |   |
|                                                  |   | Total Number  |    |   | Price         |   |   | Publicly        |   |   | Under      the     |   |
|                                                  |   | of      Shares     |    |   | Paid      Per |   |   | Announced       |   |   | Programs           |   |
| Period                                                |   | Purchased      (1) |    |   | Share         |   |   | Programs        |   |   | (in      millions) |   |
| October      1, 2009 to October 31, 2009              |   |               | 122,097 |   |          | $      | 13.44  |            |   |   | -                  |   |   | $ | - |   |
| November      1, 2009 to November 30, 2009            |   |               | 261     |   |          | $      | 12.74  |            |   |   | -                  |   |   |   | - |   |
| December      1, 2009 to  December 31, 2009 |   |               | 97      |   |          | $      | 10.90  |            |   |   | -                  |   |   |   | - |   |
| Total                                                 |   |               | 122,455 |   |          | $      | 13.43  |            |   |   | -                  |   |   | $ | - |   |

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|                                    |   | December      31, |   |
|-----------------------------------------|--------|-------------------|--------|
|                                    |   | 2004              |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |
| Dynamics      Research Corporation      |   | $                 | 100.00 |   |   | $ | 86.65 |   |   | $ | 54.68 |   |   | $ | 60.68 |   |   | $ | 44.87 |   |   | $ | 59.51 |   |
| NASDAQ      Stock Market (US Companies) |   | $                 | 100.00 |   |   | $ | 101.37 |   |   | $ | 111.03 |   |   | $ | 121.92 |   |   | $ | 72.49 |   |   | $ | 104.31 |   |
| Peer      Group                         |   | $                 | 100.00 |   |   | $ | 96.54 |   |   | $ | 98.02 |   |   | $ | 101.36 |   |   | $ | 100.39 |   |   | $ | 100.69 |   |

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ITEM 6.  SELECTED FINANCIAL DATA

|                                                                                             |   | Year      Ended December 31, |    |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
| (dollars      in thousands, except per share data)                                               |   | 2009                              |    |   | 2008(1) |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Revenue                                                                                          |   | $                                 | 268,661 |   |   | $ | 236,796 |   |   | $ | 224,676 |   |   | $ | 252,890 |   |   | $ | 293,662 |   |
| Gross      profit                                                                                |   | $                                 | 44,967  |   |   | $ | 38,994 |   |   | $ | 37,160 |   |   | $ | 33,914 |   |   | $ | 48,096 |   |
| Operating      income (loss)                                                                     |   | $                                 | 17,908  |   |   | $ | (150 | ) |   | $ | 13,104 |   |   | $ | 7,507 |   |   | $ | 20,247 |   |
| Non-GAAP      operating income(2)                                                                |   |                              |    |   |   | $ | 14,669 |   |   | $ | 13,285 |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                    |   | $                                 | 10,313  |   |   | $ | (1,084 | ) |   | $ | 7,413 |   |   | $ | 3,578 |   |   | $ | 10,791 |   |
| Income      (loss) from discontinued operations                                                  |   |                              | (141    | ) |   |   | (171 | ) |   |   | (311 | ) |   |   | 410 |   |   |   | 642 |   |
| Cumulative      benefit of accounting change                                                     |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | 84 |   |   |   | - |   |
| Net      income (loss)                                                                           |   | $                                 | 10,172  |   |   | $ | (1,255 | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |   | $ | 11,433 |   |
| Non-GAAP      net income(2)                                                                      |   |                              |    |   |   | $ | 7,807 |   |   | $ | 7,211 |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - Basic                                                      |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before cumulative effect of accounting      change |   | $                                 | 1.08    |   |   | $ | (0.11 | ) |   | $ | 0.79 |   |   | $ | 0.39 |   |   | $ | 1.22 |   |
| Income      (loss) from discontinued operations                                                  |   |                              | (0.02   | ) |   |   | (0.02 | ) |   |   | (0.03 | ) |   |   | 0.05 |   |   |   | 0.08 |   |
| Cumulative      benefit of accounting change                                                     |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | 0.01 |   |   |   | - |   |
| Net      earnings (loss) per share - Basic                                                  |   | $                                 | 1.06    |   |   | $ | (0.13 | ) |   | $ | 0.76 |   |   | $ | 0.45 |   |   | $ | 1.30 |   |
| Non-GAAP      net earnings per share - Basic(2)                                             |   |                              |    |   |   | $ | 0.82 |   |   | $ | 0.77 |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - Diluted                                                    |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before cumulative effect of accounting      change |   | $                                 | 1.06    |   |   | $ | (0.11 | ) |   | $ | 0.77 |   |   | $ | 0.38 |   |   | $ | 1.17 |   |
| Income      (loss) from discontinued operations                                                  |   |                              | (0.02   | ) |   |   | (0.02 | ) |   |   | (0.03 | ) |   |   | 0.04 |   |   |   | 0.07 |   |
| Cumulative      benefit of accounting change                                                     |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | 0.01 |   |   |   | - |   |
| Net      earnings (loss) per share - Diluted                                                |   | $                                 | 1.04    |   |   | $ | (0.13 | ) |   | $ | 0.74 |   |   | $ | 0.43 |   |   | $ | 1.24 |   |
| Non-GAAP      net earnings per share - Diluted(2)                                           |   |                              |    |   |   | $ | 0.80 |   |   | $ | 0.75 |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net      cash provided by operating activities from continuing      operations             |   | $                                 | 8,208   |   |   | $ | 18,582 |   |   | $ | 3,487 |   |   | $ | 18,301 |   |   | $ | 24,739 |   |
| Capital      expenditures                                                                        |   | $                                 | 5,185   |   |   | $ | 1,973 |   |   | $ | 1,676 |   |   | $ | 1,887 |   |   | $ | 4,484 |   |
| Depreciation                                                                                     |   | $                                 | 2,987   |   |   | $ | 2,961 |   |   | $ | 2,869 |   |   | $ | 2,837 |   |   | $ | 3,372 |   |
| EBITDA,      excluding litigation settlement effect(2)(3)                                        |   | $                                 | 24,891  |   |   | $ | 20,285 |   |   | $ | 19,585 |   |   | $ | 13,742 |   |   | $ | 28,935 |   |

|                                                                                    |   | As      of December 31, |      |
|-----------------------------------------------------------------------------------------|--------|------------------------------|-----------|
| (dollars      in thousands, except per share data)                                      |   | 2009                         |      |   | 2008(1) |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Total      assets                                                                       |   | $                            | 203,601   |   |   | $ | 208,930 |   |   | $ | 149,953 |   |   | $ | 159,852 |   |   | $ | 187,753 |   |
| Total      debt                                                                         |   | $                            | 31,973    |   |   | $ | 38,000 |   |   | $ | 7,737 |   |   | $ | 15,000 |   |   | $ | 25,412 |   |
| Stockholders’      equity                                                         |   | $                            | 94,096    |   |   | $ | 81,475 |   |   | $ | 96,504 |   |   | $ | 84,314 |   |   | $ | 74,736 |   |
| Return      on invested capital, excluding litigation settlement effect(2)(4)           |   |                         | 8.8       | % |   |   | 7.8 | % |   |   | 7.8 | % |   |   | 4.9 | % |   |   | 12.1 | % |
| Stockholders’      equity per share(5)                                            |   | $                            | 9.48      |   |   | $ | 8.42 |   |   | $ | 10.15 |   |   | $ | 9.05 |   |   | $ | 8.22 |   |
| Return      on stockholders’ equity, excluding litigation settlement effect(2)(6) |   |                         | 10.8      | % |   |   | 9.6 | % |   |   | 7.5 | % |   |   | 4.8 | % |   |   | 15.3 | % |
| Funded      backlog                                                                     |   | $                            | 158,518   |   |   | $ | 146,619 |   |   | $ | 115,155 |   |   | $ | 91,884 |   |   | $ | 143,026 |   |
| Number      of shares outstanding                                                       |   |                         | 9,923,357 |   |   |   | 9,674,512 |   |   |   | 9,509,849 |   |   |   | 9,314,962 |   |   |   | 9,096,893 |   |

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| (1)  | Amounts      include results of operations of Kadix (acquired August 1, 2008) for      the period subsequent to our acquisition.                                                                                                                                                                                                                                                    |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)       | Non-GAAP      financial data is discussed under the title “Non-GAAP Financial Measures”,      included within this Item 6.                                                                                                                                                                                                                                                   |
| (3)  | Earnings      before interest, taxes, depreciation and amortization, or EBITDA, is      defined as GAAP income from continuing operations plus net interest      expense, income taxes, depreciation expense and amortization      expense.  EBITDA as calculated by us may be calculated      differently than EBITDA for other companies.                                    |
| (4)       | Return      on invested capital is calculated by dividing operating income (or      non-GAAP operating income in 2008 and 2007), net of related income taxes,      by the ending invested capital.  Invested capital is the sum of      outstanding debt and stockholders’ equity, minus cash, normalized for the      investment made for acquisitions during the year. |
| (5)       | Stockholders’      equity per share is calculated by dividing ending stockholders’ equity by      the number of shares outstanding at the end of the  period.                                                                                                                                                                                                                |
| (6)       | Return      on stockholders’ equity is calculated by dividing net income (or non-GAAP      net income in 2008 and 2007) by ending stockholders  equity.                                                                                                                                                                                                                            |

|   | • | 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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|                                                                                                |   | Year      Ended December 31, |      |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                                                |   | 2008                         |      |   | 2007 |   |
| (in      thousands)                                                                                 |   |  $                      |      | %(1) |   |   |  $ |   | %(1) |   |
| GAAP      operating income (loss) from continuing operations                                        |   | $                            | (150      | ) | (0.1 | )% |   | $ | 13,104 |   | 5.8 | % |
| Litigation      settlement                                                                          |   |                         | 14,819    |   | 6.3 | % |   |   | 181 |   | 0.1 | % |
| Non-GAAP      operating income from continuing operations                                           |   | $                            | 14,669    |   | 6.2 | % |   | $ | 13,285 |   | 5.9 | % |
|                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |
| GAAP      income (loss) from continuing operations before provision (benefit) for      income taxes |   | $                            | (1,538    | ) | (0.6 | )% |   | $ | 12,392 |   | 5.5 | % |
| Litigation      settlement                                                                          |   |                         | 14,819    |   | 6.3 | % |   |   | 181 |   | 0.1 | % |
| Non-GAAP      income from continuing operations before provision for income      taxes              |   | $                            | 13,281    |   | 5.6 | % |   | $ | 12,573 |   | 5.6 | % |
|                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |
| GAAP      provision (benefit) for income taxes from continuing operations(2)                        |   | $                            | (454      | ) | 29.5 | % |   | $ | 4,979 |   | 40.2 | % |
| Tax      benefit for litigation settlement(2)                                                       |   |                         | 5,757     |   | 38.8 | % |   |   | 72 |   | 39.8 | % |
| Non-GAAP      provision for income taxes from continuing operations(2)                              |   | $                            | 5,303     |   | 39.9 | % |   | $ | 5,051 |   | 40.2 | % |
|                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |
| GAAP      net income (loss)                                                                         |   | $                            | (1,255    | ) | (0.5 | )% |   | $ | 7,102 |   | 3.2 | % |
| Litigation      settlement, net of tax benefit                                                      |   |                         | 9,062     |   | 3.8 | % |   |   | 109 |   | 0.0 | % |
| Non-GAAP      net income                                                                            |   | $                            | 7,807     |   | 3.3 | % |   | $ | 7,211 |   | 3.2 | % |
|                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share                                                                      |   |                         |      |   |   |   |   |   |   |   |   |   |
| GAAP      Basic                                                                                     |   | $                            | (0.13     | ) |   |   |   | $ | 0.76 |   |   |   |
| Per      share effect of litigation settlement                                                      |   |                         | 0.95      |   |   |   |   |   | 0.01 |   |   |   |
| Non-GAAP      Basic                                                                                 |   | $                            | 0.82      |   |   |   |   | $ | 0.77 |   |   |   |
|                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |
| GAAP      Diluted                                                                                   |   | $                            | (0.13     | ) |   |   |   | $ | 0.74 |   |   |   |
| Per      share effect of litigation settlement                                                      |   |                         | 0.93      |   |   |   |   |   | 0.01 |   |   |   |
| Non-GAAP      Diluted                                                                               |   | $                            | 0.80      |   |   |   |   | $ | 0.75 |   |   |   |
|                                                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic      (GAAP diluted for 2008)                                                                  |   |                         | 9,493,495 |   |   |   |   |   | 9,326,907 |   |   |   |
| Diluted      (Non-GAAP for 2008)                                                                    |   |                         | 9,704,789 |   |   |   |   |   | 9,649,897 |   |   |   |

| (1) | Represents      a percentage of total revenue.                                                                                                                                                               |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The      percent amounts represent a percentage of GAAP income (loss) before      provision for income taxes, litigation settlement and non-GAAP income      before provision for income taxes,respectively. |

|                                                      |   | Year      Ended December 31, |   |
|-----------------------------------------------------------|--------|-----------------------------------|--------|
| (in      thousands)                                       |   | 2009                              |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|  Net      income (loss)                              |   | $                                 | 10,172 |   |   | $ | (1,255 | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |   | $ | 11,433 |   |
|  Loss      (income) from discontinued operations     |   |                              | 141    |   |   |   | 171 |   |   |   | 311 |   |   |   | (410 | ) |   |   | (642 | ) |
|  Cumulative      benefit of accounting change        |   |                              | -      |   |   |   | - |   |   |   | - |   |   |   | (84 | ) |   |   | - |   |
|  Income      (loss) from continuing operations       |   |                              | 10,313 |   |   |   | (1,084 | ) |   |   | 7,413 |   |   |   | 3,578 |   |   |   | 10,791 |   |
|  Interest      expense, net                          |   |                              | 2,024  |   |   |   | 1,423 |   |   |   | 1,541 |   |   |   | 2,042 |   |   |   | 4,367 |   |
|  Provision      (benefit) for income taxes           |   |                              | 6,262  |   |   |   | (454 | ) |   |   | 4,979 |   |   |   | 2,476 |   |   |   | 7,366 |   |
|  Depreciation      expense                           |   |                              | 2,987  |   |   |   | 2,961 |   |   |   | 2,869 |   |   |   | 2,837 |   |   |   | 3,372 |   |
|  Amortization      expense                           |   |                              | 3,305  |   |   |   | 2,620 |   |   |   | 2,602 |   |   |   | 2,809 |   |   |   | 3,039 |   |
|  EBITDA                                              |   |                              | 24,891 |   |   |   | 5,466 |   |   |   | 19,404 |   |   |   | 13,742 |   |   |   | 28,935 |   |
|  Litigation      settlement                          |   |                              | -      |   |   |   | 14,819 |   |   |   | 181 |   |   |   | - |   |   |   | - |   |
|  EBITDA,      excluding litigation settlement effect |   | $                                 | 24,891 |   |   | $ | 20,285 |   |   | $ | 19,585 |   |   | $ | 13,742 |   |   | $ | 28,935 |   |

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| ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF      FINANCIAL CONDITION AND RESULTS OF  OPERATIONS |
|----------------------------------------------------------------------------------------------------------------------|

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|                                               |   | Year      Ended December 31, |   |
|----------------------------------------------------|--------|------------------------------|--------|
|                                               |   | 2009                         |   |   | 2008 |   |   | 2007 |   |
| (in      millions)                                 |   | $(1)                         |   | % |   |   | $(1) |   | % |   |   | $(1) |   | % |   |
|  Revenue                                      |   | $                            | 268.7  |   |   |   |   | $ | 236.8 |   |   |   |   | $ | 224.7 |   |   |   |
|  Gross      profit                            |   | $                            | 45.0   |   |   | 16.7 | % |   | $ | 39.0 |   |   | 16.5 | % |   | $ | 37.2 |   |   | 16.5 | % |
|                                               |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling,      general and administrative     |   |                         | 23.8   |   |   | 8.8 | % |   |   | 21.7 |   |   | 9.2 | % |   |   | 21.3 |   |   | 9.5 | % |
|  Litigation      settlement                   |   |                         | -      |   |   | 0.0 | % |   |   | 14.8 |   |   | 6.3 | % |   |   | 0.2 |   |   | 0.1 | % |
|  Amortization      of intangible assets       |   |                         | 3.3    |   |   | 1.2 | % |   |   | 2.6 |   |   | 1.1 | % |   |   | 2.6 |   |   | 1.2 | % |
|  Operating      Income (loss)                 |   |                         | 17.9   |   |   | 6.7 | % |   |   | (0.1 | ) |   | (0.1 | )% |   |   | 13.1 |   |   | 5.8 | % |
|  Interest      expense, net                   |   |                         | (2.0   | ) |   | (0.8 | )% |   |   | (1.4 | ) |   | (0.6 | )% |   |   | (1.5 | ) |   | (0.7 | )% |
|  Other      income, net                       |   |                         | 0.7    |   |   | 0.3 | % |   |   | 0.0 |   |   | 0.0 | % |   |   | 0.8 |   |   | 0.4 | % |
|  Provision      (benefit) for income taxes(2) |   |                         | 6.3    |   |   | 37.8 | % |   |   | (0.5 | ) |   | 29.5 | % |   |   | 5.0 |   |   | 40.2 | % |
|  Loss      on discontinued operations         |   |                         | (0.1   | ) |   | (0.1 | )% |   |   | (0.2 | ) |   | (0.1 | )% |   |   | (0.3 | ) |   | (0.1 | )% |
|  Net      income (loss)                       |   | $                            | 10.2   |   |   | 3.8 | % |   | $ | (1.3 | ) |   | (0.5 | )% |   | $ | 7.1 |   |   | 3.2 | % |

| (1) | Totals      may not add due to rounding.                                                                                             |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The      percentage for provision (benefit) for income taxes relate to a percentage      of income before provision for incometaxes. |

|                                            |   | Year      Ended December 31, |   |
|-------------------------------------------------|--------|------------------------------|--------|
|                                            |   | 2009                         |   |   | 2008 |   |   | 2007 |   |
| (in      millions)                              |   | $(1)                         |   |   | %(1) |   |   | $(1) |   |   | %(1) |   |   | $(1) |   |   | %(1) |   |
| National      defense and intelligence agencies |   | $                            | 147.0  |   |   | 54.7 | % |   | $ | 156.8 |   |   | 66.2 | % |   | $ | 179.1 |   |   | 79.7 | % |
| Homeland      security                          |   |                         | 53.2   |   |   | 19.8 |   |   |   | 19.3 |   |   | 8.1 |   |   |   | 3.9 |   |   | 1.7 |   |
| Federal      civilian agencies                  |   |                         | 42.4   |   |   | 15.8 |   |   |   | 32.9 |   |   | 13.9 |   |   |   | 27.5 |   |   | 12.2 |   |
| State      and local government agencies        |   |                         | 24.0   |   |   | 8.9 |   |   |   | 25.8 |   |   | 10.9 |   |   |   | 13.6 |   |   | 6.1 |   |
| Other                                           |   |                         | 2.1    |   |   | 0.8 |   |   |   | 2.0 |   |   | 0.8 |   |   |   | 0.7 |   |   | 0.3 |   |
| Total      revenue                              |   | $                            | 268.7  |   |   | 100.0 | % |   | $ | 236.8 |   |   | 100.0 | % |   | $ | 224.7 |   |   | 100.0 | % |

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

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|                                                     |   | Year      Ended December 31, |   |
|----------------------------------------------------------|--------|------------------------------|--------|
|                                                     |   | 2009                         |   |   | 2008 |   |   | 2007 |   |
|  Time      and materials                            |   |                         | 42     | % |   |   | 49 | % |   |   | 57 | % |
|  Fixed      price, including service type contracts |   |                         | 40     |   |   |   | 33 |   |   |   | 21 |   |
|  Cost      reimbursable                             |   |                         | 18     |   |   |   | 18 |   |   |   | 22 |   |
|                                                     |   |                         | 100    | % |   |   | 100 | % |   |   | 100 | % |
|                                                     |   |                         |   |   |   |   |   |   |   |   |   |   |
|  Prime      contract                                |   |                         | 71     | % |   |   | 63 | % |   |   | 56 | % |
|  Sub-contract                                       |   |                         | 29     |   |   |   | 37 |   |   |   | 44 |   |
|                                                     |   |                         | 100    | % |   |   | 100 | % |   |   | 100 | % |

|                 |   | Year      Ended December 31, |   |
|----------------------|--------|-----------------------------------|--------|
| (in      millions)   |   | 2009                              |   |   | 2008 |   |   | 2007 |   |
| Backlog:             |   |                              |   |   |   |   |   |   |   |
| Funded               |   | $                                 | 158.5  |   |   | $ | 146.6 |   |   | $ | 115.2 |   |
| Unfunded             |   |                              | 276.0  |   |   |   | 211.0 |   |   |   | 230.3 |   |
| Total                |   | $                                 | 434.5  |   |   | $ | 357.6 |   |   | $ | 345.5 |   |
| Funded      Bookings |   | $                                 | 282.3  |   |   | $ | 262.8 |   |   | $ | 246.9 |   |

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|                                                  |   | Payments      Due By Period |   |
|-------------------------------------------------------|--------|-----------------------------|--------|
|                                                  |   |                        |   |   | Less |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |                        |   |   |  than |   |   |  Two      to |   |   |  Four      to |   |   |   |   |
|                                                  |   |                        |   |   |  one |   |   |  three |   |   |  five |   |   |   |   |
| (in      millions)                                    |   | Total(1)                    |   |   | year |   |   | years |   |   | years |   |   | Thereafter |   |
| Long-term      debt payments                          |   | $                           | 32.0   |   |   | $ | 8.0 |   |   | $ | 16.0 |   |   | $ | 8.0 |   |   | $ | - |   |
| Interest      payments                                |   |                        | 1.6    |   |   |   | 0.7 |   |   |   | 0.8 |   |   |   | 0.1 |   |   |   | - |   |
| Operating      lease payments                         |   |                        | 34.7   |   |   |   | 8.5 |   |   |   | 10.8 |   |   |   | 9.1 |   |   |   | 6.2 |   |
| Total      contractual obligation payments            |   | $                           | 68.3   |   |   | $ | 17.2 |   |   | $ | 27.6 |   |   | $ | 17.2 |   |   | $ | 6.2 |   |
| Contractually      obligated operating lease receipts |   | $                           | 12.4   |   |   | $ | 3.1 |   |   | $ | 4.0 |   |   | $ | 3.5 |   |   | $ | 1.7 |   |

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

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

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|                                                               |   |
|--------------------------------------------------------------------|--------|
| ITEM      8. FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA |

TABLE OFCONTENTS

|                                                                                                                                                                | Page |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|------|
|  Report of Independent Registered Public Accounting      Firm                                                                                                  | 46   |
|  Consolidated Balance Sheets as of December 31, 2009 and      2008                                                                                        | 47   |
|  Consolidated Statements of Operations for the years ended      December 31, 2009, 2008 and 2007                                                          | 48   |
|  Consolidated Statements of Changes in Stockholders’ Equity and      Comprehensive Income for the years ended December 31, 2009, 2008 and      2007 | 49   |
|  Consolidated Statements of Cash Flows for the years ended      December 31, 2009, 2008 and 2007                                                          | 50   |
|  Notes to Consolidated Financial    Statements                                                                                                                 | 51   |
|  Schedule II — Valuation and Qualifying Accounts      and Reserves                                                                             | 79   |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

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DYNAMICS RESEARCHCORPORATION

|                                                                                                                                                                          |   | December      31, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                          |   | 2009              |    |   | 2008 |   |
| Assets                                                                                                                                                                        |   |              |    |   |   |   |
| Current      assets                                                                                                                                                           |   |              |    |   |   |   |
| Cash      and cash equivalents                                                                                                                                                |   | $                 | 55      |   |   | $ | 7,111 |   |
| Contract      receivables, net                                                                                                                                                |   |              | 72,569  |   |   |   | 70,632 |   |
| Prepaid      expenses and other current assets                                                                                                                                |   |              | 5,702   |   |   |   | 1,706 |   |
| Discontinued      operations                                                                                                                                                  |   |              | 2,058   |   |   |   | 1,591 |   |
| Total      current assets                                                                                                                                                     |   |              | 80,384  |   |   |   | 81,040 |   |
| Noncurrent      assets                                                                                                                                                        |   |              |    |   |   |   |   |   |
| Property      and equipment, net                                                                                                                                              |   |              | 13,915  |   |   |   | 8,999 |   |
| Goodwill                                                                                                                                                                      |   |              | 97,641  |   |   |   | 97,641 |   |
| Intangible      assets, net                                                                                                                                                   |   |              | 4,074   |   |   |   | 7,379 |   |
| Deferred      tax asset                                                                                                                                                       |   |              | 4,252   |   |   |   | 10,396 |   |
| Other      noncurrent assets                                                                                                                                                  |   |              | 3,335   |   |   |   | 3,125 |   |
| Discontinued      operations                                                                                                                                                  |   |              | -       |   |   |   | 350 |   |
| Total      noncurrent assets                                                                                                                                                  |   |              | 123,217 |   |   |   | 127,890 |   |
| Total      assets                                                                                                                                                             |   | $                 | 203,601 |   |   | $ | 208,930 |   |
|                                                                                                                                                                          |   |              |    |   |   |   |   |   |
| Liabilities      and stockholders' equity                                                                                                                                     |   |              |    |   |   |   |   |   |
| Current      liabilities                                                                                                                                                      |   |              |    |   |   |   |   |   |
| Current      portion of long-term debt                                                                                                                                        |   | $                 | 8,000   |   |   | $ | 8,000 |   |
| Accounts      payable                                                                                                                                                         |   |              | 18,299  |   |   |   | 17,874 |   |
| Accrued      compensation and employee benefits                                                                                                                               |   |              | 16,357  |   |   |   | 13,644 |   |
| Deferred      tax liability                                                                                                                                                   |   |              | 7,046   |   |   |   | 2,670 |   |
| Other      accrued expenses                                                                                                                                                   |   |              | 3,708   |   |   |   | 24,702 |   |
| Discontinued      operations                                                                                                                                                  |   |              | 186     |   |   |   | 279 |   |
| Total      current liabilities                                                                                                                                                |   |              | 53,596  |   |   |   | 67,169 |   |
| Long-term      liabilities                                                                                                                                                    |   |              |    |   |   |   |   |   |
| Long-term      debt                                                                                                                                                           |   |              | 23,973  |   |   |   | 30,000 |   |
| Other      long-term liabilities                                                                                                                                              |   |              | 31,936  |   |   |   | 30,286 |   |
| Total      long-term liabilities                                                                                                                                              |   |              | 55,909  |   |   |   | 60,286 |   |
| Total      liabilities                                                                                                                                                        |   |              | 109,505 |   |   |   | 127,455 |   |
| Commitments      and contingencies (Note 15)                                                                                                                                  |   |              |    |   |   |   |   |   |
| Stockholders'      equity                                                                                                                                                     |   |              |    |   |   |   |   |   |
| Preferred      stock, $0.10 par value; 5,000,000 shares authorized; no shares      issued                                                                                     |   |              | -       |   |   |   | - |   |
| Common      stock, $0.10 par value; 30,000,000 shares authorized; 9,923,357 and      9,674,512 shares issued and outstanding at December 31, 2009 and 2008,      respectively |   |              | 992     |   |   |   | 967 |   |
| Capital      in excess of par value                                                                                                                                           |   |              | 52,580  |   |   |   | 51,919 |   |
| Accumulated      other comprehensive loss, net of tax                                                                                                                         |   |              | (20,505 | ) |   |   | (22,268 | ) |
| Retained      earnings                                                                                                                                                        |   |              | 61,029  |   |   |   | 50,857 |   |
| Total      stockholders' equity                                                                                                                                               |   |              | 94,096  |   |   |   | 81,475 |   |
| Total      liabilities and stockholders' equity                                                                                                                               |   | $                 | 203,601 |   |   | $ | 208,930 |   |

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DYNAMICS RESEARCHCORPORATION

|                                                                                                                        |   | Year      Ended December 31, |      |
|-----------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                                                                        |   | 2009                         |      |   | 2008 |   |   | 2007 |   |
| Revenue                                                                                                                     |   | $                            | 268,661   |   |   | $ | 236,796 |   |   | $ | 224,676 |   |
| Cost      of revenue                                                                                                        |   |                         | 223,694   |   |   |   | 197,802 |   |   |   | 187,516 |   |
| Gross      profit                                                                                                           |   |                         | 44,967    |   |   |   | 38,994 |   |   |   | 37,160 |   |
|                                                                                                                        |   |                         |      |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                                                           |   |                         | 23,754    |   |   |   | 21,705 |   |   |   | 21,273 |   |
| Litigation      settlement                                                                                                  |   |                         | -         |   |   |   | 14,819 |   |   |   | 181 |   |
| Amortization      of intangible assets                                                                                      |   |                         | 3,305     |   |   |   | 2,620 |   |   |   | 2,602 |   |
| Operating      income (loss)                                                                                                |   |                         | 17,908    |   |   |   | (150 | ) |   |   | 13,104 |   |
| Interest      expense, net                                                                                                  |   |                         | (2,024    | ) |   |   | (1,423 | ) |   |   | (1,541 | ) |
| Other      income, net                                                                                                      |   |                         | 691       |   |   |   | 35 |   |   |   | 829 |   |
| Income      (loss) from continuing operations before provision for income      taxes                                        |   |                         | 16,575    |   |   |   | (1,538 | ) |   |   | 12,392 |   |
| Provision      (benefit) for income taxes                                                                                   |   |                         | 6,262     |   |   |   | (454 | ) |   |   | 4,979 |   |
| Income      (loss) from continuing operations                                                                               |   |                         | 10,313    |   |   |   | (1,084 | ) |   |   | 7,413 |   |
| Loss      from discontinued operations, net of tax benefit of $173, $250 and $297 in      2009, 2008 and 2007, respectively |   |                         | (141      | ) |   |   | (171 | ) |   |   | (311 | ) |
| Net      income (loss)                                                                                                      |   | $                            | 10,172    |   |   | $ | (1,255 | ) |   | $ | 7,102 |   |
|                                                                                                                        |   |                         |      |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share                                                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                                               |   | $                            | 1.08      |   |   | $ | (0.11 | ) |   | $ | 0.79 |   |
| Loss      from discontinued operations                                                                                      |   |                         | (0.02     | ) |   |   | (0.02 | ) |   |   | (0.03 | ) |
| Net      income (loss)                                                                                                      |   | $                            | 1.06      |   |   | $ | (0.13 | ) |   | $ | 0.76 |   |
|                                                                                                                        |   |                         |      |   |   |   |   |   |   |   |   |   |
| Diluted                                                                                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                                               |   | $                            | 1.06      |   |   | $ | (0.11 | ) |   | $ | 0.77 |   |
| Loss      from discontinued operations                                                                                      |   |                         | (0.02     | ) |   |   | (0.02 | ) |   |   | (0.03 | ) |
| Net      income (loss)                                                                                                      |   | $                            | 1.04      |   |   | $ | (0.13 | ) |   | $ | 0.74 |   |
|                                                                                                                        |   |                         |      |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                                                    |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                       |   |                         | 9,551,614 |   |   |   | 9,493,495 |   |   |   | 9,326,907 |   |
| Diluted                                                                                                                     |   |                         | 9,772,722 |   |   |   | 9,493,495 |   |   |   | 9,649,897 |   |

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DYNAMICS RESEARCHCORPORATION

|                                                                                               |   |                     |   |   |           |    |   | Capital        |   |    | Accumulated |   |   |     |    |   |   |    |
|----------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|----------------|---------|--------|----------------|--------|---------|-------------|--------|--------|----------|---------|--------|--------|---------|
|                                                                                               |   |                     |   |   |           |    |   | In      Excess |   |    | Other       |   |   |     |    |   |   |    |
|                                                                                               |   | Common      Stock Issued |   |   | 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                                                                                    |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | -       |   |   |    | 7,102 |   |   |   | 7,102 |   |
| Other      comprehensive income, net of tax:                                                       |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   |   |   |
| Pension      liability adjustment                                                                  |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | 2,353   |   |   |    | - |   |   |   | 2,353 |   |
| Unrealized      gains on investments, net of reclassification adjustment                           |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | 108     |   |   |    | - |   |   |   | 108 |   |
| Other      comprehensive income                                                                    |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   | 2,461 |   |
| Comprehensive      income                                                                          |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   | 9,563 |   |
| Issuance      of common stock through stock plan transactions                                      |   |                     | 135    |   |           |    | 14     |           |   |    | 1,166       |   |   |     | -       |   |   |    | - |   |   |   | 1,180 |   |
| Issuance      of restricted stock                                                                  |   |                     | 99     |   |           |    | 10     |           |   |    | (10         | )      |   |     | -       |   |   |    | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                |   |                     | (20    | )      |           |    | (2     | )              |   |    | 2           |   |   |     | -       |   |   |    | - |   |   |   | - |   |
| Release      of restricted stock                                                                   |   |                     | (19    | )      |           |    | (2     | )              |   |    | (200        | )      |   |     | -       |   |   |    | - |   |   |   | (202 | ) |
| Share-based      compensation                                                                      |   |                     | -      |   |           |    | -      |           |   |    | 1,640       |   |   |     | -       |   |   |    | - |   |   |   | 1,640 |   |
| Tax      benefit from stock plan transactions                                                      |   |                     | -      |   |           |    | -      |           |   |    | 77          |   |   |     | -       |   |   |    | - |   |   |   | 77 |   |
| Tax      deficiency on equity awards                                                               |   |                     | -      |   |           |    | -      |           |   |    | (68         | )      |   |     | -       |   |   |    | - |   |   |   | (68 | ) |
| Balance      at December 31, 2007, as previously presented                                         |   |                     | 9,510  |   |           |    | 951    |           |   |    | 50,251      |   |   |     | (6,745  | )      |   |    | 52,047 |   |   |   | 96,504 |   |
| Impact      of change in defined benefit plan measurement date                                     |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | -       |   |   |    | 65 |   |   |   | 65 |   |
| Balance      at December 31, 2007, adjusted                                                        |   |                     | 9,510  |   |           |    | 951    |           |   |    | 50,251      |   |   |     | (6,745  | )      |   |    | 52,112 |   |   |   | 96,569 |   |
| Comprehensive      loss:                                                                           |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   |   |   |
| Net      loss                                                                                      |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | -       |   |   |    | (1,255 | ) |   |   | (1,255 | ) |
| Other      comprehensive loss, net of tax:                                                         |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   |   |   |
| Pension      liability adjustment, net of reclassification adjustment                              |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | (14,896 | )      |   |    | - |   |   |   | (14,896 | ) |
| Reclassification      adjustment for gains realized in net loss                                    |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | (108    | )      |   |    | - |   |   |   | (108 | ) |
| Unrealized      loss on derivative instruments                                                     |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | (519    | )      |   |    | - |   |   |   | (519 | ) |
| Other      comprehensive loss                                                                      |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   | (15,523 | ) |
| Comprehensive      loss                                                                            |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   | (16,778 | ) |
| Issuance      of common stock through stock plan transactions                                      |   |                     | 128    |   |           |    | 12     |           |   |    | 843         |   |   |     | -       |   |   |    | - |   |   |   | 855 |   |
| Issuance      of restricted stock                                                                  |   |                     | 92     |   |           |    | 9      |           |   |    | (9          | )      |   |     | -       |   |   |    | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                |   |                     | (13    | )      |           |    | (1     | )              |   |    | 1           |   |   |     | -       |   |   |    | - |   |   |   | - |   |
| Release      of restricted stock                                                                   |   |                     | (42    | )      |           |    | (4     | )              |   |    | (418        | )      |   |     | -       |   |   |    | - |   |   |   | (422 | ) |
| Share-based      compensation                                                                      |   |                     | -      |   |           |    | -      |           |   |    | 1,148       |   |   |     | -       |   |   |    | - |   |   |   | 1,148 |   |
| Tax      benefit from stock plan transactions                                                      |   |                     | -      |   |           |    | -      |           |   |    | 103         |   |   |     | -       |   |   |    | - |   |   |   | 103 |   |
| Balance      at December 31, 2008                                                                  |   |                     | 9,675  |   |           |    | 967    |           |   |    | 51,919      |   |   |     | (22,268 | )      |   |    | 50,857 |   |   |   | 81,475 |   |
| Comprehensive      income:                                                                         |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   |   |   |
| Net      income                                                                                    |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | -       |   |   |    | 10,172 |   |   |   | 10,172 |   |
| Other      comprehensive income, net of tax:                                                       |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   |   |   |
| Pension      liability adjustment, net of reclassification adjustment                              |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | 1,587   |   |   |    | - |   |   |   | 1,587 |   |
| Changes      in unrealized loss on derivative instruments, net of reclassification      adjustment |   |                     | -      |   |           |    | -      |           |   |    | -           |   |   |     | 176     |   |   |    | - |   |   |   | 176 |   |
| Other      comprehensive income                                                                    |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   | 1,763 |   |
| Comprehensive      income                                                                          |   |                     |   |   |           |    |   |           |   |    |        |   |   |     |    |   |   |    |   |   |   |   | 11,935 |   |
| Issuance      of common stock through stock plan transactions, net                                 |   |                     | 190    |   |           |    | 19     |           |   |    | 231         |   |   |     | -       |   |   |    | - |   |   |   | 250 |   |
| Issuance      of restricted stock                                                                  |   |                     | 101    |   |           |    | 10     |           |   |    | (10         | )      |   |     | -       |   |   |    | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                |   |                     | (24    | )      |           |    | (2     | )              |   |    | 2           |   |   |     | -       |   |   |    | - |   |   |   | - |   |
| Release      of restricted stock                                                                   |   |                     | (19    | )      |           |    | (2     | )              |   |    | (171        | )      |   |     | -       |   |   |    | - |   |   |   | (173 | ) |
| Share-based      compensation                                                                      |   |                     | -      |   |           |    | -      |           |   |    | 736         |   |   |     | -       |   |   |    | - |   |   |   | 736 |   |
| Tax      deficiency from stock plan transactions                                                   |   |                     | -      |   |           |    | -      |           |   |    | (127        | )      |   |     | -       |   |   |    | - |   |   |   | (127 | ) |
| Balance      at December 31, 2009                                                                  |   |                     | 9,923  |   |           | $       | 992    |           |   | $       | 52,580      |   |   | $        | (20,505 | )      |   | $       | 61,029 |   |   | $ | 94,096 |   |

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DYNAMICS RESEARCHCORPORATION

|                                                                                           |   | Year      Ended December 31, |    |
|------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                           |   | 2009                         |    |   | 2008 |   |   | 2007 |   |
| Cash      flows from operating activities:                                                     |   |                         |    |   |   |   |   |   |   |
| Net      income (loss)                                                                         |   | $                            | 10,172  |   |   | $ | (1,255 | ) |   | $ | 7,102 |   |
| Loss      from discontinued operations                                                         |   |                         | (141    | ) |   |   | (171 | ) |   |   | (311 | ) |
| Income      (loss) from continuing operations                                                  |   |                         | 10,313  |   |   |   | (1,084 | ) |   |   | 7,413 |   |
| Adjustments      to reconcile net cash provided by operating activities:                       |   |                         |    |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                   |   |                         | 2,987   |   |   |   | 2,961 |   |   |   | 2,869 |   |
| Amortization      of intangible assets                                                         |   |                         | 3,305   |   |   |   | 2,620 |   |   |   | 2,602 |   |
| Share-based      compensation                                                                  |   |                         | 736     |   |   |   | 1,148 |   |   |   | 1,640 |   |
| Investment      income from equity interest                                                    |   |                         | (355    | ) |   |   | (483 | ) |   |   | (516 | ) |
| Tax      benefit from stock plan transactions, net of tax deficiencies from equity      awards |   |                         | 127     |   |   |   | (103 | ) |   |   | (9 | ) |
| Litigation      settlement (payment)                                                           |   |                         | (15,000 | ) |   |   | 14,819 |   |   |   | 181 |   |
| Deferred      income taxes                                                                     |   |                         | 9,362   |   |   |   | (4,572 | ) |   |   | (2,972 | ) |
| Other                                                                                          |   |                         | (637    | ) |   |   | (620 | ) |   |   | (497 | ) |
| Change      in operating assets and liabilities:                                               |   |                         |    |   |   |   |   |   |   |   |   |   |
| Contract      receivables, net                                                                 |   |                         | (1,937  | ) |   |   | 1,310 |   |   |   | 640 |   |
| Prepaid      expenses and other current assets                                                 |   |                         | (3,996  | ) |   |   | 4 |   |   |   | 1,251 |   |
| Accounts      payable                                                                          |   |                         | (2,342  | ) |   |   | 3,558 |   |   |   | (6,223 | ) |
| Accrued      compensation and employee benefits                                                |   |                         | 2,713   |   |   |   | (1,519 | ) |   |   | (745 | ) |
| Other      accrued expenses                                                                    |   |                         | (2,043  | ) |   |   | 2,239 |   |   |   | (1,286 | ) |
| Other      long-term liabilities                                                               |   |                         | 4,975   |   |   |   | (1,696 | ) |   |   | (861 | ) |
| Net      cash provided by continuing operations                                                |   |                         | 8,208   |   |   |   | 18,582 |   |   |   | 3,487 |   |
| Net      cash provided by (used in) discontinued operations                                    |   |                         | (280    | ) |   |   | 173 |   |   |   | (542 | ) |
| Net      cash provided by operating activities                                                 |   |                         | 7,928   |   |   |   | 18,755 |   |   |   | 2,945 |   |
| Cash      flows from investing activities:                                                     |   |                         |    |   |   |   |   |   |   |   |   |   |
| Purchase      of business, net of cash acquired                                                |   |                         | (4,250  | ) |   |   | (43,016 | ) |   |   | - |   |
| Additions      to property and equipment                                                       |   |                         | (5,185  | ) |   |   | (1,973 | ) |   |   | (1,676 | ) |
| Proceeds      from sale of investments and long-lived assets                                   |   |                         | 215     |   |   |   | 291 |   |   |   | 6 |   |
| Dividends      from equity investment                                                          |   |                         | 556     |   |   |   | 423 |   |   |   | 180 |   |
| Payments      related to sale of building                                                      |   |                         | -       |   |   |   | (35 | ) |   |   | (980 | ) |
| Change      in other assets                                                                    |   |                         | (345    | ) |   |   | 21 |   |   |   | (170 | ) |
| Net      cash used in continuing operations                                                    |   |                         | (9,009  | ) |   |   | (44,289 | ) |   |   | (2,640 | ) |
| Net      cash used in discontinued operations                                                  |   |                         | (71     | ) |   |   | (37 | ) |   |   | (112 | ) |
| Net      cash used in investing activities                                                     |   |                         | (9,080  | ) |   |   | (44,326 | ) |   |   | (2,752 | ) |
| Cash      flow from financing activities:                                                      |   |                         |    |   |   |   |   |   |   |   |   |   |
| Borrowings      under term loan agreement                                                      |   |                         | -       |   |   |   | 40,000 |   |   |   | - |   |
| Repayments      under term loan agreement                                                      |   |                         | (8,000  | ) |   |   | (2,000 | ) |   |   | - |   |
| Borrowings      under revolving credit agreement                                               |   |                         | 79,497  |   |   |   | 69,225 |   |   |   | 201,918 |   |
| Repayments      under revolving credit agreement                                               |   |                         | (77,524 | ) |   |   | (76,962 | ) |   |   | (209,181 | ) |
| Proceeds      from the exercise of stock plan transactions                                     |   |                         | 250     |   |   |   | 855 |   |   |   | 1,180 |   |
| Tax      benefit from stock plan transactions, net of tax deficiencies from equity      awards |   |                         | (127    | ) |   |   | 103 |   |   |   | 9 |   |
| Payments      of deferred financing costs                                                      |   |                         | -       |   |   |   | (545 | ) |   |   | - |   |
| Net      cash provided by (used in) financing activities                                       |   |                         | (5,904  | ) |   |   | 30,676 |   |   |   | (6,074 | ) |
| Net      increase (decrease) in cash and cash equivalents                                      |   |                         | (7,056  | ) |   |   | 5,105 |   |   |   | (5,881 | ) |
| Cash      and cash equivalents, beginning of period                                            |   |                         | 7,111   |   |   |   | 2,006 |   |   |   | 7,887 |   |
| Cash      and cash equivalents, end of period                                                  |   | $                            | 55      |   |   | $ | 7,111 |   |   | $ | 2,006 |   |
|                                                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                                         |   |                         |    |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for interest                                                    |   | $                            | 2,350   |   |   | $ | 973 |   |   | $ | 1,494 |   |
| Cash      paid during the year for income taxes, net of refunds                                |   | $                            | 522     |   |   | $ | 2,399 |   |   | $ | 6,206 |   |
| Supplemental      disclosure of noncash financing and investing activities:                    |   |                         |    |   |   |   |   |   |   |   |   |   |
| Issuance      of restricted stock                                                              |   | $                            | 903     |   |   | $ | 869 |   |   | $ | 1,135 |   |
| Increase      (decrease) in pension liability                                                  |   | $                            | (2,630  | ) |   | $ | 24,682 |   |   | $ | (3,899 | ) |
| Change      in fair value of derivatives                                                       |   | $                            | (291    | ) |   | $ | 860 |   |   | $ | - |   |
| Accrual      of additions to property and equipment                                            |   | $                            | 2,767   |   |   | $ | - |   |   | $ | - |   |
| Accrual      of earnout on purchase of business                                                |   | $                            | -       |   |   | $ | 4,250 |   |   | $ | - |   |

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NOTE 1. NATURE OF OPERATIONS

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|   | • | Level      1 — Quoted prices for identical instruments in active    markets.                                                                                                                                                                              |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                            |
|   | • | Level      2 — Quoted prices for similar instruments in active markets; quoted prices      for identical or similar instruments in markets that are not active; and      model-derived valuations in which significant value drivers are      observable. |
|   |    |                                                                                                                                                                                                                                                            |
|   | • | Level      3 — Valuations derived from valuation techniques in which significant      value drivers are unobservable.                                                                                                                                     |

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|                                                             |   | Year      Ended December 31, |   |
|------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                             |   | 2009                              |   |   | 2008 |   |   | 2007 |   |
| Product      revenue                                             |   | $                                 | 6,611  |   |   | $ | 6,028 |   |   | $ | 4,901 |   |
|                                                             |   |                              |   |   |   |   |   |   |   |   |   |   |
| Loss      before benefit for income taxes                        |   | $                                 | (314   | ) |   | $ | (421 | ) |   | $ | (608 | ) |
| Benefit      for income taxes                                    |   |                              | 173    |   |   |   | 250 |   |   |   | 297 |   |
| Loss      from operations of discontinued operations, net of tax |   | $                                 | (141   | ) |   | $ | (171 | ) |   | $ | (311 | ) |

|                                           |   | December      31, |   |
|------------------------------------------------|--------|-------------------|--------|
|                                           |   | 2009              |   |   | 2008 |   |
| Accounts      receivables                      |   | $                 | 946    |   |   | $ | 806 |   |
| Prepaid      expenses and other current assets |   |              | 886    |   |   |   | 785 |   |
| Total      current assets at December 31, 2008 |   |              |   |   |   |   | 1,591 |   |
| Property      and equipment, net               |   |              | 226    |   |   |   | 350 |   |
| Total      current assets at December 31, 2009 |   |              | 2,058  |   |   |   |   |   |
| Total      assets                              |   | $                 | 2,058  |   |   | $ | 1,941 |   |
|                                           |   |              |   |   |   |   |   |   |
| Accounts      payable                          |   | $                 | 186    |   |   | $ | 221 |   |
| Other      accrued expenses                    |   |              | -      |   |   |   | 58 |   |
| Total      current liabilities                 |   | $                 | 186    |   |   | $ | 279 |   |

| Cash      consideration at purchase date   |   | $      | 44,960 |   |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Additional      earnout cash consideration |   |   | 5,000  |   |   |   |   |   |
| Transaction      costs                     |   |   | 408    |   |   |   |   |   |
| Purchase      price                        |   |   | 50,368 |   |   |   |   |   |
| Cash      acquired                         |   |   | (3,102 | )      |   |   |   |   |
| Purchase      price, net of cash acquired  |   | $      | 47,266 |   |   |   |   |   |

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| Current      assets, net of cash acquired       |   | $      | 9,638  |   |   |              |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|-------------------|--------|
| Property      and equipment                     |   |   | 316    |   |   |              |   |
| Current      liabilities                        |   |   | (4,200 | )      |   |              |   |
| Long-term      liabilities                      |   |   | (4     | )      |   |              |   |
| Goodwill      and other intangible assets       |   |   | 41,516 |   |   |              |   |
| Total      purchase price allocation            |   | $      | 47,266 |   |   |              |   |
|                                            |   |   |   |   |   | amortization      |   |
|                                            |   |   |   |   |   | life      (years) |   |
| Customer      contracts                         |   | $      | 3,500  |   |   |              | 5      |   |
| Customer      relationships                     |   |   | 1,900  |   |   |              | 6      |   |
| Non-compete      agreement                      |   |   | 1,400  |   |   |              | 3      |   |
| 8(a)      contract transition                   |   |   | 130    |   |   |              | 1      |   |
| Goodwill                                        |   |   | 34,586 |   |   |              | -      |   |
| Total      goodwill and other intangible assets |   | $      | 41,516 |   |   |              |   |   |

|                     |   | Year      Ended December 31, |    |
|--------------------------|--------|------------------------------|---------|
|                     |   | 2008                         |    |   | 2007 |   |
|                     |   | (unaudited)                  |    |
| Revenue                  |   | $                            | 261,540 |   |   | $ | 247,647 |   |
| Gross      profit        |   | $                            | 48,118  |   |   | $ | 45,982 |   |
| Operating      income    |   | $                            | 4,228   |   |   | $ | 14,916 |   |
| Net      income          |   | $                            | 692     |   |   | $ | 6,848 |   |
|                     |   |                         |    |   |   |   |   |   |
| Earnings      per share: |   |                         |    |   |   |   |   |   |
| Basic                    |   | $                            | 0.07    |   |   | $ | 0.73 |   |
| Diluted                  |   | $                            | 0.07    |   |   | $ | 0.71 |   |

----

Table of Contents

|                                                                                                                                          |   | December      31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                          |   | 2009              |    |   | 2008 |   |
| Contract      receivables, net:                                                                                                               |   |              |    |   |   |   |
| Billed      receivables                                                                                                                       |   | $                 | 28,203  |   |   | $ | 34,598 |   |
| Unbilled      receivables(1):                                                                                                                 |   |              |    |   |   |   |   |   |
| Revenues      recorded in excess of milestone billings on fixed price contracts with the      State of Tennesse and the State of Ohio in 2008 |   |              | 18,004  |   |   |   | 8,907 |   |
| Retainages      and fee withholdings                                                                                                          |   |              | 689     |   |   |   | 1,179 |   |
| Other      unbilled receivables                                                                                                               |   |              | 26,256  |   |   |   | 26,858 |   |
| Total      unbilled receivables                                                                                                               |   |              | 44,949  |   |   |   | 36,944 |   |
| Allowance      for doubtful accounts                                                                                                          |   |              | (583    | ) |   |   | (910 | ) |
| Contract      receivables, net                                                                                                                |   | $                 | 72,569  |   |   | $ | 70,632 |   |
|                                                                                                                                          |   |              |    |   |   |   |   |   |
| Prepaid      expenses and other current assets:                                                                                               |   |              |    |   |   |   |   |   |
| Refundable      income taxes                                                                                                                  |   | $                 | 1,604   |   |   | $ | - |   |
| Restricted      cash                                                                                                                          |   |              | 262     |   |   |   | 150 |   |
| Other                                                                                                                                         |   |              | 3,836   |   |   |   | 1,556 |   |
| Prepaid      expenses and other current assets                                                                                                |   | $                 | 5,702   |   |   | $ | 1,706 |   |
|                                                                                                                                          |   |              |    |   |   |   |   |   |
| Property      and equipment, net:                                                                                                             |   |              |    |   |   |   |   |   |
| Software                                                                                                                                      |   | $                 | 12,107  |   |   | $ | 11,602 |   |
| Furniture      and other equipment                                                                                                            |   |              | 9,679   |   |   |   | 7,405 |   |
| Leasehold      improvements                                                                                                                   |   |              | 6,445   |   |   |   | 2,193 |   |
| Production      equipment                                                                                                                     |   |              | 440     |   |   |   | 441 |   |
| Property      and equipment                                                                                                                   |   |              | 28,671  |   |   |   | 21,641 |   |
| Less      accumulated depreciation                                                                                                            |   |              | (14,756 | ) |   |   | (12,642 | ) |
| Property      and equipment, net                                                                                                              |   | $                 | 13,915  |   |   | $ | 8,999 |   |
|                                                                                                                                          |   |              |    |   |   |   |   |   |
| Other      noncurrent assets:                                                                                                                 |   |              |    |   |   |   |   |   |
| Deferred      compensation plan investments                                                                                                   |   | $                 | 1,378   |   |   | $ | 1,107 |   |
| Equity      investments                                                                                                                       |   |              | 978     |   |   |   | 1,180 |   |
| Other                                                                                                                                         |   |              | 979     |   |   |   | 838 |   |
| Other      noncurrent assets                                                                                                                  |   | $                 | 3,335   |   |   | $ | 3,125 |   |
|                                                                                                                                          |   |              |    |   |   |   |   |   |
| Accrued      compensation and employee benefits:                                                                                              |   |              |    |   |   |   |   |   |
| Accrued      compensation and related  taxes                                                                                        |   | $                 | 9,029   |   |   | $ | 7,504 |   |
| Accrued      vacation                                                                                                                         |   |              | 4,724   |   |   |   | 4,391 |   |
| Accrued      pension liability                                                                                                                |   |              | 840     |   |   |   | - |   |
| Other                                                                                                                                         |   |              | 1,764   |   |   |   | 1,749 |   |
| Accrued      compensation and employee benefits                                                                                               |   | $                 | 16,357  |   |   | $ | 13,644 |   |
|                                                                                                                                          |   |              |    |   |   |   |   |   |
| Other      accrued expenses:                                                                                                                  |   |              |    |   |   |   |   |   |
| Accrued      litigation settlement                                                                                                            |   | $                 | -       |   |   | $ | 15,000 |   |
| Accrued      acquisition costs                                                                                                                |   |              | -       |   |   |   | 4,265 |   |
| Accrued      income taxes                                                                                                                     |   |              | -       |   |   |   | 2,042 |   |
| Deferred      gain on sale of building                                                                                                        |   |              | 676     |   |   |   | 676 |   |
| Other                                                                                                                                         |   |              | 3,032   |   |   |   | 2,719 |   |
| Other      accrued expenses                                                                                                                   |   | $                 | 3,708   |   |   | $ | 24,702 |   |
|                                                                                                                                          |   |              |    |   |   |   |   |   |

----

Table of Contents

|                                      |   | December      31, |   |
|-------------------------------------------|--------|-------------------|--------|
|                                      |   | 2009              |   |   | 2008 |   |
| Other      long-term liabilities:         |   |              |   |   |   |   |
| Accrued      pension liability            |   | $                 | 20,666 |   |   | $ | 22,570 |   |
| Deferred      gain on sale of building    |   |              | 3,381  |   |   |   | 4,057 |   |
| Deferred      compensation plan liability |   |              | 1,378  |   |   |   | 1,107 |   |
| Other                                     |   |              | 6,511  |   |   |   | 2,552 |   |
| Other      long-term liabilities          |   | $                 | 31,936 |   |   | $ | 30,286 |   |

| (1) | At      December 31, 2009 and 2008, $503 and $495, respectively, of unbilled      retainages and fee withholdings are not anticipated to be billed within      twelve months.  Additionally, at December 31, 2008, $4,557 of      the unbilled balance under the Company’s contract with the State of      Tennessee was not scheduled to be invoiced within one  year. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | December      31, 2009 |   |   | December 31,      2008 |   |
|---------------------------------|--------|------------------------|--------|--------|-----------------------------|--------|
|                            |   |                   |   |   | Accumulated                 |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                            |   | Cost                   |   |   | Amortization                |   |   | Net |   |   | Cost |   |   | Amortization |   |   | Net |   |
| Customer      relationships     |   | $                      | 13,400 |   |                        | $      | (11,643 | ) |   | $ | 1,757 |   |   | $ | 14,700 |   |   | $ | (11,769 | ) |   | $ | 2,931 |   |
| Customer      contracts         |   |                   | 3,500  |   |                        |   | (2,234 | ) |   |   | 1,266 |   |   |   | 3,500 |   |   |   | (522 | ) |   |   | 2,978 |   |
| Non-competition      agreements |   |                   | 1,400  |   |                        |   | (349 | ) |   |   | 1,051 |   |   |   | 1,400 |   |   |   | - |   |   |   | 1,400 |   |
| 8(a)      contract transition   |   |                   | 130    |   |                        |   | (130 | ) |   |   | - |   |   |   | 130 |   |   |   | (60 | ) |   |   | 70 |   |
| Total                           |   | $                      | 18,430 |   |                        | $      | (14,356 | ) |   | $ | 4,074 |   |   | $ | 19,730 |   |   | $ | (12,351 | ) |   | $ | 7,379 |   |

| Year      ending December 31: |   |   |   |
|-------------------------------|--------|--------|--------|
| 2010                          |   | $      | 1,542  |   |
| 2011                          |   | $      | 1,188  |   |
| 2012                          |   | $      | 492    |   |
| 2013                          |   | $      | 349    |   |
| 2014                          |   | $      | 299    |   |
| 2015      and thereafter      |   | $      | 204    |   |

|                                                   |   | Year      Ended December 31, |   |
|--------------------------------------------------------|--------|-----------------------------------|--------|
|                                                   |   | 2009                              |   |   | 2008 |   |   | 2007 |   |
| Income      (loss) from operations                     |   | $                                 | 6,262  |   |   | $ | (454 | ) |   | $ | 4,979 |   |
| Loss      from discontinued operations                 |   |                              | (173   | ) |   |   | (250 | ) |   |   | (297 | ) |
| Deficiency      (benefit) from stock plan transactions |   |                              | 127    |   |   |   | (103 | ) |   |   | (9 | ) |
| Other      comprehensive income (loss)                 |   |                              | 1,158  |   |   |   | (10,198 | ) |   |   | 1,617 |   |
|                                                   |   | $                                 | 7,374  |   |   | $ | (11,005 | ) |   | $ | 6,290 |   |

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Table of Contents

|                                            |   | Year      Ended December 31, |   |
|-------------------------------------------------|--------|-----------------------------------|--------|
|                                            |   | 2009                              |   |   | 2008 |   |   | 2007 |   |
| Currently      payable (receivable)             |   |                              |   |   |   |   |   |   |   |
| Federal                                         |   | $                                 | (2,997 | ) |   | $ | 3,429 |   |   | $ | 6,772 |   |
| State                                           |   |                              | (103   | ) |   |   | 689 |   |   |   | 1,179 |   |
| Total      currently payable (receivable)       |   |                              | (3,100 | ) |   |   | 4,118 |   |   |   | 7,951 |   |
| Deferred      payable (prepaid)                 |   |                              |   |   |   |   |   |   |   |   |   |   |
| Federal                                         |   |                              | 8,367  |   |   |   | (3,692 | ) |   |   | (2,486 | ) |
| State                                           |   |                              | 995    |   |   |   | (880 | ) |   |   | (486 | ) |
| Total      deferred payable (prepaid)           |   |                              | 9,362  |   |   |   | (4,572 | ) |   |   | (2,972 | ) |
|  Provision      (benefit) for income taxes |   | $                                 | 6,262  |   |   | $ | (454 | ) |   | $ | 4,979 |   |

|                                                |   | Year      Ended December 31, |   |
|-----------------------------------------------------|--------|-----------------------------------|--------|
|                                                |   | 2009                              |   |   | 2008 |   |   | 2007 |   |
| Provision      (benefit) at statutory rate          |   | $                                 | 5,801  |   |   | 35.0 | % |   | $ | (538 | ) |   | 35.0 | % |   | $ | 4,337 |   |   | 35.0 | % |
| State      income taxes, net of federal tax benefit |   |                              | 752    |   |   | 4.5 |   |   |   | (127 | ) |   | 8.3 |   |   |   | 536 |   |   | 4.3 |   |
| Permanent      differences, net                     |   |                              | (35    | ) |   | (0.2 | ) |   |   | 126 |   |   | (8.2 | ) |   |   | 157 |   |   | 1.3 |   |
| Stock      based compensation                       |   |                              | -      |   |   | - |   |   |   | 71 |   |   | (4.7 | ) |   |   | 73 |   |   | 0.6 |   |
| Other,      net                                     |   |                              | (256   | ) |   | (1.5 | ) |   |   | 14 |   |   | (0.9 | ) |   |   | (124 | ) |   | (1.0 | ) |
| Provision      (benefit) for income taxes           |   | $                                 | 6,262  |   |   | 37.8 | % |   | $ | (454 | ) |   | 29.5 | % |   | $ | 4,979 |   |   | 40.2 | % |

|                                                              |   | December 31, |    |
|-------------------------------------------------------------------|--------|-------------------|---------|
|                                                              |   | 2009              |    |   | 2008 |   |
| Pension      liability                                            |   | $                 | 13,208  |   |   | $ | 14,250 |   |
| Deferred      gain on sale of building                            |   |              | 1,854   |   |   |   | 2,163 |   |
| Accrued      expenses                                             |   |              | 3,684   |   |   |   | 7,648 |   |
| Accrued      vacation                                             |   |              | 1,386   |   |   |   | 1,050 |   |
| Employee      share-based compensation                            |   |              | 630     |   |   |   | 700 |   |
| Net      operating loss carry forward, net of federal tax benefit |   |              | 621     |   |   |   | - |   |
| Receivables      reserves                                         |   |              | 244     |   |   |   | 392 |   |
| Other                                                             |   |              | 257     |   |   |   | 341 |   |
| Deferred      tax assets                                          |   |              | 21,884  |   |   |   | 26,544 |   |
| Unbilled      receivables                                         |   |              | (9,863  | ) |   |   | (6,911 | ) |
| Fixed      assets and intangibles                                 |   |              | (7,083  | ) |   |   | (3,814 | ) |
| Pension      funding                                              |   |              | (4,882  | ) |   |   | (5,302 | ) |
| Domestic      International Sales Corporation                     |   |              | (2,183  | ) |   |   | (2,119 | ) |
| Other                                                             |   |              | (667    | ) |   |   | (672 | ) |
| Deferred      tax liability                                       |   |              | (24,678 | ) |   |   | (18,818 | ) |
| Deferred      tax asset (liability), net                          |   | $                 | (2,794  | ) |   | $ | 7,726 |   |

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Table of Contents

| Balance      at December 31, 2007                |   | $      | 517  |   |
|--------------------------------------------------|--------|--------|------|--------|
| Reductions      for current year tax positions   |   |   | (87  | )      |
| Balance      at December 31, 2008                |   |   | 430  |   |
| Additions      for current year tax positions    |   |   | 132  |   |
| Lapses      of applicable statute of limitations |   |   | (153 | )      |
| Balance      at December 31, 2009                |   | $      | 409  |   |

|   | • | Any      failure by the Company and its subsidiaries to make any payment of      principal, interest and other sums due within three calendar days of the      date when such payment is due;                   |   |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   | • | Any      breach by the Company or any of its subsidiaries of certain covenants,      representations and warranties;                                                                                            |   |
|   | • | Any      default and acceleration of any indebtedness owed by the Company or any of      its subsidiaries to any person (other than the bank group) which is in      excess of $1.0 million;                    |   |
|   | • | Any      final judgment against the Company or any of its subsidiaries in excess of      $1.0 million which has not been insured to the reasonable satisfaction of      Brown Brothers as administrative agent; |   |
|   | • | Any      bankruptcy (voluntary or involuntary) of the Company or any of its      subsidiaries;                                                                                                                  |   |
|   | • | Any      material adverse change in the business or financial condition of the      Company and its subsidiaries; or                                                                                            |   |
|   | • | Any      change in control of the Company.                                                                                                                                                                      |   |

----

Table of Contents

|                                  |                              |   | Fair      Value Measurements    |   |   |         |   |
|---------------------------------------|-----------------------------------|--------|---------------------------------|--------|--------|--------------|--------|
|                                  |                              |   | At      December 31, 2009 Using |   |   |         |   |
|                                  | Balance      Sheet Classification |   | Level      1                    |   |   | Level      2 |   |   | Level      3 |   |   | Total |   |
| Assets:                               |                              |   |                            |   |   |         |   |   |   |   |   |   |   |
| Investments      held in Rabbi Trusts | Other      noncurrent assets      |   | $                               | 1,378  |   |         | $      | - |   |   | $ | - |   |   | $ | 1,378 |   |
|                                  |                              |   |                            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                          |                              |   |                            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swap               | Other      long-term liabilities  |   | $                               | -      |   |         | $      | 569 |   |   | $ | - |   |   | $ | 569 |   |
|                                  |                              |   |                            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

|                                  |                              |   | Fair      Value Measurements    |   |   |         |   |
|---------------------------------------|-----------------------------------|--------|---------------------------------|--------|--------|--------------|--------|
|                                  |                              |   | At      December 31, 2008 Using |   |   |         |   |
|                                  | Balance      Sheet Classification |   | Level      1                    |   |   | Level      2 |   |   | Level      3 |   |   | Total |   |
| Assets:                               |                              |   |                            |   |   |         |   |   |   |   |   |   |   |
| Investments      held in Rabbi Trusts | Other      noncurrent assets      |   | $                               | 1,107  |   |         | $      | - |   |   | $ | - |   |   | $ | 1,107 |   |
|                                  |                              |   |                            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                          |                              |   |                            |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swap               | Other      long-term liabilities  |   | $                               | -      |   |         | $      | 860 |   |   | $ | - |   |   | $ | 860 |   |

|                                                           |   | December      31, |   |   | Year      Ended December 31, |   |
|----------------------------------------------------------------|--------|-------------------|--------|--------|------------------------------|--------|
|                                                           |   | 2009              |   |   | 2008                         |   |   | 2009 |   |   | 2008 |   |
| Other      long-term liabilities                               |   | $                 | 569    |   |                         | $      | 860 |   |   |   |   |   |   |   |
| Loss      recognized in other comprehensive income, net of tax |   |              |   |   |                         |   |   |   |   | $ | 343 |   |   | $ | 519 |   |

----

Table of Contents

|                                    |   | Year      Ended December 31, |   |
|-----------------------------------------|--------|-----------------------------------|--------|
|                                    |   | 2009                              |   |   | 2008 |   |   | 2007 |   |
| Interest      cost                      |   | $                                 | 4,269  |   |   | $ | 4,103 |   |   | $ | 3,955 |   |
| Expected      return on plan assets     |   |                              | (3,857 | ) |   |   | (5,975 | ) |   |   | (5,811 | ) |
| Recognized      actuarial loss          |   |                              | 1,209  |   |   |   | 586 |   |   |   | 1,104 |   |
| Net      periodic pension cost (income) |   | $                                 | 1,621  |   |   | $ | (1,286 | ) |   | $ | (752 | ) |

|                                                |   | December      31, |    |
|-----------------------------------------------------|--------|-------------------|---------|
|                                                |   | 2009              |    |   | 2008 |   |
| Change      in benefit obligation                   |   |              |    |   |   |   |
| Benefit      obligation at beginning of year        |   | $                 | 69,691  |   |   | $ | 67,342 |   |
| Interest      cost                                  |   |              | 4,269   |   |   |   | 4,444 |   |
| Benefits      paid                                  |   |              | (3,450  | ) |   |   | (3,516 | ) |
| Actuarial      (gain) loss                          |   |              | 4,723   |   |   |   | 1,421 |   |
| Benefit      obligation at end of year              |   |              | 75,233  |   |   |   | 69,691 |   |
| Change      in plan assets                          |   |              |    |   |   |   |   |   |
| Fair      value of plan assets at beginning of year |   |              | 47,121  |   |   |   | 68,060 |   |
| Actual      return on plan assets                   |   |              | 10,001  |   |   |   | (17,423 | ) |
| Employer      contributions                         |   |              | 55      |   |   |   | - |   |
| Benefits      paid                                  |   |              | (3,450  | ) |   |   | (3,516 | ) |
| Fair      value of plan assets at end of year       |   |              | 53,727  |   |   |   | 47,121 |   |
| Funded      status                                  |   | $                 | (21,506 | ) |   | $ | (22,570 | ) |

|                                            |   | December      31, |   |
|-------------------------------------------------|--------|-------------------|--------|
|                                            |   | 2009              |   |   | 2008 |   |
| Accrued      compensation and employee benefits |   | $                 | 840    |   |   | $ | - |   |
| Other      long-term liabilities                |   |              | 20,666 |   |   |   | 22,570 |   |
| Net      amount recognized                      |   | $                 | 21,506 |   |   | $ | 22,570 |   |

----

Table of Contents

|   |   | Beginning |   |   |         |   |   | Experience  |   |   | Ending  |   |
|--------|--------|-----------|--------|--------|--------------|--------|--------|-------------|--------|--------|---------|--------|
|   |   | Balance   |   |   | Amortization |   |   | Loss/(Gain) |   |   | Balance |   |
| 2009   |   | $         | 35,942 |   |         | $      | (1,209 | )           |   | $      | (1,421  | )      |   | $ | 33,312 |   |
| 2008   |   | $         | 11,260 |   |         | $      | (635   | )           |   | $      | 25,317  |   |   | $ | 35,942 |   |
| 2007   |   | $         | 15,159 |   |         | $      | (1,104 | )           |   | $      | (2,795  | )      |   | $ | 11,260 |   |

|                                              |   | December      31,                 |   |
|---------------------------------------------------|--------|-----------------------------------|--------|
|                                              |   | 2009                              |   |   | 2008 |   |
| Used      to determine benefit obligations        |   |                              |   |   |   |   |
| Discount      rate                                |   |                              | 5.75   | % |   |   | 6.25 | % |
| Rate      of compensation increase                |   |                              | N/A    |   |   |   | N/A |   |
|                                              |   |
|                                              |   | Year      Ended December 31, |   |
|                                              |   | 2009                              |   |   |   | 2008 |   |   |   | 2007 |   |
| Used      to determine net periodic benefit costs |   |                              |   |   |   |   |   |   |   |   |   |
| Discount      rate                                |   |                              | 6.25   | % |   |   | 6.25 | % |   |   | 5.75 | % |
| Expected      rate of return on assets            |   |                              | 8.50   | % |   |   | 9.00 | % |   |   | 9.00 | % |
| Rate      of compensation increase                |   |                              | N/A    |   |   |   | N/A |   |   |   | N/A |   |

----

Table of Contents

|                                |   |   |   |   | Fair      Value Measurement at December 31, 2009 |   |
|-------------------------------------|--------|--------|--------|--------|--------------------------------------------------|--------|
|                                |   |   |   |   | Quoted      Prices                               |   |   |   |   |   |   |   |
|                                |   |   |   |   | in      Active                                   |   |   | Significant |   |   |   |   |
|                                |   |   |   |   | Markets      for                                 |   |   | Other |   |   | Significant |   |
|                                |   |   |   |   | Identical                                        |   |   | Observable |   |   | Unobservable |   |
|                                |   |   |   |   | Assets                                           |   |   | Inputs |   |   | Inputs |   |
| Asset      Category                 |   | Total  |   |   | (Level      1)                                   |   |   | (Level      2) |   |   | (Level      3) |   |
| Cash      and cash equivalents      |   | $      | 200    |   |                                             | $      | 200 |   |   | $ | - |   |   | $ | - |   |
| Equity      securities:             |   |   |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| International      equity           |   |   | 7,940  |   |                                             |   | 7,940 |   |   |   | - |   |   |   | - |   |
| U.S.      large-cap growth          |   |   | 6,578  |   |                                             |   | 6,578 |   |   |   | - |   |   |   | - |   |
| U.S.      large-cap value           |   |   | 6,017  |   |                                             |   | 6,017 |   |   |   | - |   |   |   | - |   |
| Small      value equity             |   |   | 3,321  |   |                                             |   | 3,321 |   |   |   | - |   |   |   | - |   |
| Mid-cap      value                  |   |   | 2,525  |   |                                             |   | 2,525 |   |   |   | - |   |   |   | - |   |
| Emerging      markets growth        |   |   | 2,332  |   |                                             |   | 2,332 |   |   |   | - |   |   |   | - |   |
| Real      estate investment trusts  |   |   | 1,968  |   |                                             |   | 1,968 |   |   |   | - |   |   |   | - |   |
| Fixed      income securities:       |   |   |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| Corporate      and government bonds |   |   | 19,846 |   |                                             |   | - |   |   |   | 19,846 |   |   |   | - |   |
| Other      type of investments:     |   |   |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| Managed      futures                |   |   | 2,000  |   |                                             |   | - |   |   |   | - |   |   |   | 2,000 |   |
| Hedge      fund                     |   |   | 1,000  |   |                                             |   | - |   |   |   | - |   |   |   | 1,000 |   |
| Total                               |   | $      | 53,727 |   |                                             | $      | 30,881 |   |   | $ | 19,846 |   |   | $ | 3,000 |   |

|                                                     |   | Fair      Value Measurement Using Significant Unobservable Inputs (Level      3) |   |
|----------------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|
|                                                     |   | Managed      Futures                                                             |   |   | HedgeFund |   |   | Total |   |
| Beginning      balance at December 31, 2008              |   | $                                                                                | -      |   |   | $ | - |   |   | $ | - |   |
| Actual      returns on plan assets:                      |   |                                                                             |   |   |   |   |   |   |   |   | - |   |
| Relating      to assets still held at the reporting date |   |                                                                             | -      |   |   |   | - |   |   |   | - |   |
| Relating      to assets sold during the period           |   |                                                                             | -      |   |   |   | - |   |   |   | - |   |
| Purchases                                                |   |                                                                             | 2,000  |   |   |   | 1,000 |   |   |   | 3,000 |   |
| Transfers      in and/or out of Level 3                  |   |                                                                             | -      |   |   |   | - |   |   |   | - |   |
| Ending      balance at December 31, 2009                 |   | $                                                                                | 2,000  |   |   | $ | 1,000 |   |   | $ | 3,000 |   |

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| Year      ending December 31:                                   |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|
| 2010                                                            |   | $      | 3,682  |   |
| 2011                                                            |   | $      | 3,879  |   |
| 2012                                                            |   | $      | 4,185  |   |
| 2013                                                            |   | $      | 4,449  |   |
| 2014                                                            |   | $      | 4,595  |   |
| Five      subsequent fiscal years ending December 31, 2019 |   | $      | 25,620 |   |

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|                                        |   | Year      Ended December 31, |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | 2009                         |   |   | 2008 |   |   | 2007 |   |
| Cost      of products and services          |   | $                            | 319    |   |   | $ | 483 |   |   | $ | 605 |   |
| Selling,      general and administrative    |   |                         | 417    |   |   |   | 665 |   |   |   | 1,035 |   |
| Total      share-based compensation expense |   | $                            | 736    |   |   | $ | 1,148 |   |   | $ | 1,640 |   |

|                                                  |   |           |     |   |     |   |   | Weighted    |   |   |      |   |
|-------------------------------------------------------|--------|----------------|----------|--------|----------|--------|--------|-------------|--------|--------|-----------|--------|
|                                                  |   |           |     |   |     |   |   | Average     |   |   |      |   |
|                                                  |   |           |     |   | Weighted |   |   | Remaining   |   |   |      |   |
|                                                  |   |           |     |   | Average  |   |   | Contractual |   |   | Aggregate |   |
|                                                  |   | Number      of |     |   | Exercise |   |   | Term        |   |   | Intrinsic |   |
|                                                  |   | Shares         |     |   | Price    |   |   | (in years)  |   |   | Value     |   |
| Outstanding      and exercisable at December 31, 2008 |   |           | 889,108  |   |     | $      | 8.42   |        |   |   | 2.1       |   |   | $ | 729 |   |
| Granted                                               |   |           | -        |   |     | $      | -      |        |   |   |      |   |   |   |   |   |
| Exercised                                             |   |           | (273,581 | )      |     | $      | 5.55   |        |   |   |      |   |   |   |   |   |
| Cancelled                                             |   |           | (8,684   | )      |     | $      | 14.53  |        |   |   |      |   |   |   |   |   |
| Outstanding      and exercisable at December 31, 2009 |   |           | 606,843  |   |     | $      | 9.62   |        |   |   | 1.5       |   |   | $ | 981 |   |

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|                                                           |   | Year      Ended December 31, |   |
|----------------------------------------------------------------|--------|------------------------------|--------|
|                                                           |   | 2009                         |   |   | 2008 |   |   | 2007 |   |
| Amounts      realized or received from stock option exercises: |   |                         |   |   |   |   |   |   |   |
| Cash      proceeds received                                    |   | $                            | 631    |   |   | $ | 449 |   |   | $ | 558 |   |
| Intrinsic      value realized                                  |   | $                            | 1,972  |   |   | $ | 267 |   |   | $ | 279 |   |
| Income      tax benefit realized                               |   | $                            | 84     |   |   | $ | 101 |   |   | $ | 70 |   |

|                                |   |           |    |   | Weighted   |   |
|-------------------------------------|--------|----------------|---------|--------|------------|--------|
|                                |   |           |    |   | Average    |   |
|                                |   | Number      of |    |   | Grant-Date |   |
|                                |   | Shares         |    |   | Fair Value |   |
| Nonvested      at December 31, 2008 |   |           | 158,476 |   |       | $      | 10.61 |   |
| Granted                             |   |           | 100,748 |   |       | $      | 8.96 |   |
| Vested                              |   |           | (69,534 | )      |       | $      | 11.36 |   |
| Cancelled                           |   |           | (23,989 | )      |       | $      | 9.94 |   |
| Nonvested      at December 31, 2009 |   |           | 165,701 |   |       | $      | 9.39 |   |

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|                                                                           |   | Before |    |   | Tax       |   |   | Net      of |   |
|--------------------------------------------------------------------------------|--------|--------|---------|--------|-----------|--------|--------|-------------|--------|
|                                                                           |   | Tax    |    |   | (Expense) |   |   | Tax         |   |
|                                                                           |   | Amount |    |   | Benefit   |   |   | Amount      |   |
| Year      ended December 31, 2007                                              |   |   |    |   |      |   |   |        |   |
| Minimum      pension liability adjustment                                      |   | $      | 3,899   |   |      | $      | (1,546 | )           |   | $ | 2,353 |   |
| Unrealized      holding gains on investments                                   |   |   | 179     |   |      |   | (71    | )           |   |   | 108 |   |
| Other      comprehensive income                                                |   | $      | 4,078   |   |      | $      | (1,617 | )           |   | $ | 2,461 |   |
|                                                                           |   |   |    |   |      |   |   |        |   |   |   |   |
| Year      ended December 31, 2008                                              |   |   |    |   |      |   |   |        |   |   |   |   |
| Pension      liability adjustment                                              |   | $      | (25,268 | )      |      | $      | 10,018 |        |   | $ | (15,250 | ) |
| Less:      reclassification adjustment for costs realized in net loss          |   |   | 586     |   |      |   | (232   | )           |   |   | 354 |   |
| Net      pension liability adjustment                                          |   |   | (24,682 | )      |      |   | 9,786  |        |   |   | (14,896 | ) |
| Unrealized      holding losses on derivative instruments                       |   |   | (860    | )      |      |   | 341    |        |   |   | (519 | ) |
| Reclassification      adjustment for gains on investments realized in net loss |   |   | (179    | )      |      |   | 71     |        |   |   | (108 | ) |
| Other      comprehensive loss                                                  |   | $      | (25,721 | )      |      | $      | 10,198 |        |   | $ | (15,523 | ) |
|                                                                           |   |   |    |   |      |   |   |        |   |   |   |   |
| Year      ended December 31, 2009                                              |   |   |    |   |      |   |   |        |   |   |   |   |
| Pension      liability adjustment                                              |   | $      | 1,421   |   |      | $      | (564   | )           |   | $ | 857 |   |
| Less:      reclassification adjustment for costs realized in net    income     |   |   | 1,209   |   |      |   | (479   | )           |   |   | 730 |   |
| Net      pension liability adjustment                                          |   |   | 2,630   |   |      |   | (1,043 | )           |   |   | 1,587 |   |
| Unrealized      holding losses on derivative instruments                       |   |   | (175    | )      |      |   | 69     |        |   |   | (106 | ) |
| Less:      reclassification adjustment for costs realized in net    income     |   |   | 466     |   |      |   | (184   | )           |   |   | 282 |   |
| Net      unrealized holding gain on derivative instruments                     |   |   | 291     |   |      |   | (115   | )           |   |   | 176 |   |
| Other      comprehensive income                                                |   | $      | 2,921   |   |      | $      | (1,158 | )           |   | $ | 1,763 |   |

|                                                                    |   | Year      Ended December 31, |      |
|-------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                    |   | 2009                              |      |   | 2008 |   |   | 2007 |   |
|  Weighted      average shares outstanding - Basic                  |   |                              | 9,551,614 |   |   |   | 9,493,495 |   |   |   | 9,326,907 |   |
|  Dilutive      effect of stock options and restricted stock grants |   |                              | 221,108   |   |   |   | - |   |   |   | 322,990 |   |
|  Weighted      average shares outstanding - Diluted                |   |                              | 9,772,722 |   |   |   | 9,493,495 |   |   |   | 9,649,897 |   |

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|                          |   | Lease      |   |   | Sublease |   |
|-------------------------------|--------|------------|--------|--------|----------|--------|
|                          |   | Commitment |   |   | Receipts |   |
| Year      ending December 31: |   |       |   |   |     |   |
| 2010                          |   | $          | 8,530  |   |     | $      | 3,147 |   |
| 2011                          |   |       | 6,086  |   |     |   | 2,314 |   |
| 2012                          |   |       | 4,760  |   |     |   | 1,732 |   |
| 2013                          |   |       | 4,617  |   |     |   | 1,732 |   |
| 2014                          |   |       | 4,508  |   |     |   | 1,732 |   |
| 2015      and thereafter      |   |       | 6,185  |   |     |   | 1,732 |   |
|                          |   | $          | 34,686 |   |     | $      | 12,389 |   |

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|                                            |   | First   |   |   | Second  |   |   | Third   |   |   | Fourth  |   |   | Fiscal |   |
|-------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
|                                            |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Year   |   |
| 2009                                            |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Revenue                                         |   | $       | 67,203 |   |    | $      | 68,128 |    |   | $      | 67,504  |   |   | $      | 65,826 |   |   | $ | 268,661 |   |
| Gross      profit                               |   | $       | 11,260 |   |    | $      | 11,113 |    |   | $      | 10,622  |   |   | $      | 11,972 |   |   | $ | 44,967 |   |
| Operating      income                           |   | $       | 3,976  |   |    | $      | 3,930  |    |   | $      | 4,058   |   |   | $      | 5,944  |   |   | $ | 17,908 |   |
| Income      from continuing operations          |   | $       | 1,957  |   |    | $      | 2,174  |    |   | $      | 2,896   |   |   | $      | 3,286  |   |   | $ | 10,313 |   |
| Income      (loss) from discontinued operations |   |    | (186   | )      |    |   | (124   | )       |   |   | 59      |   |   |   | 110    |   |   |   | (141 | ) |
| Net      income                                 |   | $       | 1,771  |   |    | $      | 2,050  |    |   | $      | 2,955   |   |   | $      | 3,396  |   |   | $ | 10,172 |   |
| Earnings      per share:                        |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic                                           |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations          |   | $       | 0.20   |   |    | $      | 0.23   |    |   | $      | 0.30    |   |   | $      | 0.34   |   |   | $ | 1.08 |   |
| Income      (loss) from discontinued operations |   |    | (0.02  | )      |    |   | (0.02  | )       |   |   | 0.01    |   |   |   | 0.01   |   |   |   | (0.02 | ) |
| Net      income                                 |   | $       | 0.18   |   |    | $      | 0.21   |    |   | $      | 0.31    |   |   | $      | 0.35   |   |   | $ | 1.06 |   |
| Diluted                                         |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations          |   | $       | 0.20   |   |    | $      | 0.22   |    |   | $      | 0.29    |   |   | $      | 0.33   |   |   | $ | 1.06 |   |
| Income      (loss) from discontinued operations |   |    | (0.02  | )      |    |   | (0.01  | )       |   |   | 0.01    |   |   |   | 0.01   |   |   |   | (0.02 | ) |
| Net      income                                 |   | $       | 0.18   |   |    | $      | 0.21   |    |   | $      | 0.30    |   |   | $      | 0.34   |   |   | $ | 1.04 |   |
| 2008                                            |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenue                                         |   | $       | 54,773 |   |    | $      | 53,708 |    |   | $      | 62,300  |   |   | $      | 66,015 |   |   | $ | 236,796 |   |
| Gross      profit                               |   | $       | 8,561  |   |    | $      | 8,109  |    |   | $      | 10,044  |   |   | $      | 12,280 |   |   | $ | 38,994 |   |
| Operating      income (loss)                    |   | $       | (6,011 | )      |    | $      | 2,601  |    |   | $      | (2,068  | )      |   | $      | 5,328  |   |   | $ | (150 | ) |
| Income      (loss) from continuing operations   |   | $       | (5,230 | )      |    | $      | 1,578  |    |   | $      | (127    | )      |   | $      | 2,695  |   |   | $ | (1,084 | ) |
| Income      (loss) from discontinued operations |   |    | (26    | )      |    |   | 51     |    |   |   | (105    | )      |   |   | (91    | ) |   |   | (171 | ) |
| Net      income (loss)                          |   | $       | (5,256 | )      |    | $      | 1,629  |    |   | $      | (232    | )      |   | $      | 2,604  |   |   | $ | (1,255 | ) |
| Earnings      (loss) per share:                 |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic                                           |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations   |   | $       | (0.55  | )      |    | $      | 0.17   |    |   | $      | (0.01   | )      |   | $      | 0.28   |   |   | $ | (0.11 | ) |
| Income      (loss) from discontinued operations |   |    | (0.01  | )      |    |   | 0.00   |    |   |   | (0.01   | )      |   |   | (0.01  | ) |   |   | (0.02 | ) |
| Net      income (loss)                          |   | $       | (0.56  | )      |    | $      | 0.17   |    |   | $      | (0.02   | )      |   | $      | 0.27   |   |   | $ | (0.13 | ) |
| Diluted                                         |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations   |   | $       | (0.55  | )      |    | $      | 0.16   |    |   | $      | (0.01   | )      |   | $      | 0.28   |   |   | $ | (0.11 | ) |
| Income      (loss) from discontinued operations |   |    | (0.01  | )      |    |   | 0.01   |    |   |   | (0.01   | )      |   |   | (0.01  | ) |   |   | (0.02 | ) |
| Net      income (loss)                          |   | $       | (0.56  | )      |    | $      | 0.17   |    |   | $      | (0.02   | )      |   | $      | 0.27   |   |   | $ | (0.13 | ) |

| (1) | Operating      income includes a litigation settlement of $8,819 and $6,000 in the first      quarter and third quarter of 2008, respectively.                                                                             |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Basic      and diluted earnings per share is computed independently for each of the      quarters presented; accordingly, the sum of the quarterly earnings per      share may not equal the total computed for the  year. |

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DYNAMICS RESEARCHCORPORATION

|                                 |   |            |   |   | Additions       |   |   |            |   |   |       |   |
|--------------------------------------|--------|-----------------|--------|--------|-----------------|--------|--------|-----------------|--------|--------|------------|--------|
|                                 |   | Balance      at |   |   | Charged      to |   |   | Charged      to |   |   | Deductions |   |   | Balance      at |   |
|                                 |   | Beginning       |   |   | Costs      and  |   |   | Other           |   |   | and        |   |   | End      of |   |
|                                 |   | of      Period  |   |   | Expenses        |   |   | Accounts        |   |   | Write-Offs |   |   | Period |   |
| Allowance      for doubtful accounts |   |            |   |   |            |   |   |            |   |   |       |   |   |   |   |
| Year      ended December 31,    |   |            |   |   |            |   |   |            |   |   |       |   |   |   |   |
| 2009                                 |   | $               | 910    |   |            | $      | 124    |            |   | $      | -          |   |   | $ | (451 | ) |   | $ | 583 |   |
| 2008                                 |   | $               | 873    |   |            | $      | 249    |            |   | $      | -          |   |   | $ | (212 | ) |   | $ | 910 |   |
| 2007                                 |   | $               | 724    |   |            | $      | 204    |            |   | $      | -          |   |   | $ | (55 | ) |   | $ | 873 |   |

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE

| ITEM 9A. CONTROLS ANDPROCEDURES |
|---------------------------------|

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ITEM 9B. OTHERINFORMATION

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE

| Name                                |   | Executive      Office Held                                                                      |   | Age    |   |
|-------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|--------|--------|
| James      P. Regan                 |   | President,      Chairman and Chief Executive Officer                                            |   | 69     |   |
|                                |   |                                                                                            |   |   |   |
| Richard      A. Covel               |   | Vice      President, General Counsel and Secretary                                              |   | 63     |   |
|                                |   |                                                                                            |   |   |   |
| David      Keleher                  |   | Senior      Vice President and Chief Financial Officer                                          |   | 60     |   |
|                                |   |                                                                                            |   |   |   |
| Steven      P. Wentzell             |   | Senior      Vice President and General Manager,Human      Resources                             |   | 63     |   |
|                                |   |                                                                                            |   |   |   |
| Lawrence      H. O’Brien, Jr. |   | Senior      Vice President and General Manager,Business      Solutions and Business Development |   | 58     |   |

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ITEM 11. EXECUTIVE COMPENSATION

| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND      MANAGEMENT AND RELATED STOCKHOLDERMATTERS |
|-------------------------------------------------------------------------------------------------------------|

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, ANDDIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

| (a)    |   | Documents      filed as part of the report:                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (1)    | Financial      Statements                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | The      consolidated financial statements of the Company are listed in the index      under Part II, Item 8 of this Annual Report on      Form 10-K.                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (2)    | Financial      Statement Schedules                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | The      Schedule II Valuation and Qualifying Accounts and Reserves of the      Company are listed in the index under Part II, Item 8 of this      Annual Report on Form 10-K. Other financial statements schedules are      omitted because of the absence of conditions under which they are required      or because the required information is given in the supplementary      consolidated financial statements or notes thereto. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (3)    | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | The      exhibits that are filed with this Annual Report on Form 10-K, or that      are incorporated herein by reference, are set forth in the      Exhibit Index hereto.                                                                                                                                                                                                                                                                         |

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|                                 |                                                 |   |
|--------------------------------------|------------------------------------------------------|--------|
|                                 | DYNAMICS      RESEARCH CORPORATION                   |   |
|                                 |                                                 |   |
|  Date:      March 29, 2010 | /s/      James P. Regan                              |   |
|                                 |                                                 |   |
|                                 | James      P. Regan                                  |   |
|                                 | President,      Chairman and Chief Executive Officer |   |

| /s/      James P. Regan                   |   | President,      Chairman and Chief Executive Officer (Principal Executive      Officer)                    |   | March 29,      2010 |
|-------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|--------------------------|
| James      P. Regan                       |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      David Keleher                    |   | Senior      Vice President and Chief Financial Officer (Principal Financial      Officer)                  |   | March 29,      2010 |
| David      Keleher                        |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Shaun McCarthy                   |   | Vice      President, Corporate Controller and Chief Accounting Officer (Principal      Accounting Officer) |   | March 29,      2010 |
| Shaun      McCarthy                       |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      John S. Anderegg, Jr.       |   | Director                                                                                                   |   | March 29,      2010 |
| John      S. Anderegg, Jr.           |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Francis J. Aguilar               |   | Director                                                                                                   |   | March 29,      2010 |
| Francis      J. Aguilar                   |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Gen. George T. Babbitt, Jr. |   | Director                                                                                                   |   | March 29,      2010 |
| Gen.      George T. Babbitt, Jr.     |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Kenneth F. Kames                 |   | Director                                                                                                   |   | March 29,      2010 |
| Kenneth      F. Kames                     |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Lt. Gen. Charles P. McCausland   |   | Director                                                                                                   |   | March 29,      2010 |
| Lt.      Gen. Charles P. McCausland       |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Nickolas Stavropoulos            |   | Director                                                                                                   |   | March 29,      2010 |
| Nickolas      Stavropoulos                |   |                                                                                                       |

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Table of Contents

|             |   |                                                                                                                                                                                                   |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                            |   | Herewith |   | Form                             |   | Date |
| 2.1              |   | Equity      Purchase Agreement among Dynamics Research Corporation and Impact      Innovations Group LLC and J3 Technology Services Corp., dated      August 2, 2004.                             |   |     |   | 8-K                              |   | September      8, 2004 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 2.2              |   | Membership      Interest Purchase Agreement among Dynamics Research Corporation      and Kadix Systems, LLC and Daisy D. Layman, The Sole Member of Kadix      Systems, LLC, dated July 30, 2008. |   |     |   | 8-K                              |   | August      5, 2008 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.1              |   | Restated      Articles of Organization of the Company, dated May 22,      1987.                                                                                                                   |   |     |   | 10-Q                             |   | June      17, 1987 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.2              |   | By-Laws      of the Company, dated May 22, 1987.                                                                                                                                                  |   |     |   | 10-Q                             |   | June      17, 1987 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.3              |   | Certificate      of Vote of Directors Establishing Series B Preferred Stock, dated      February 17, 1998.                                                                                   |   |     |   | 8-A12G                           |   | June      25, 1998 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.4              |   | Amendment,      dated September 10, 1998, to the Certificate of Vote of Directors      Establishing Series B Preferred Stock.                                                                |   |     |   | 8-A12G/A                         |   | September      30, 1998 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.5              |   | Certificate      of Vote of Directors Establishing Series A Preferred Stock, dated      July 14, 1988.                                                                                       |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.6              |   | Amendment,      dated April 28, 1998, to the restated Articles of Organization of the      Company.                                                                                               |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.7              |   | Amendment,      dated April 25, 2000, to the restated Articles of Organization of the      Company.                                                                                               |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.8              |   | Certificate      of Designation with respect to the Series B Preferred Stock, par value      $.10 per share, of the Company (attached as Exhibit A to the Rights      Agreement).                      |   |     |   | 8-K                              |   | July      25, 2008 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 4.1              |   | Specimen      certificate for shares of the Company’s common stock.                                                                                                                              |   |     |   | S-8                              |   | April      27, 2001 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 4.2              |   | Rights      Agreement dated as of July 23, 2008 ("Rights Agreement") between the      Company and American Stock Transfer & Trust Company, as Rights      Agent.                                   |   |     |   | 8-K                              |   | July      25, 2008 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 10.1             |   | Form      of indemnification agreement for directors of the Company.                                                                                                                                   |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |

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Table of Contents

|             |   |                                                                                                                              |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                       |   | Herewith |   | Form                             |   | Date |
| 10.2*            |   | Severance      Agreement between John S. Anderegg, Jr. and the    Company.                                                   |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.3*            |   | Deferred      Compensation Plan for Non-Employee Directors of the    Company.                                                     |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.4*            |   | Form      of Supplemental Retirement Pension Agreement by and between the Company      and Albert Rand.                           |   |     |   | 10-Q                             |   | March      31, 1997 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.5*            |   | Amended      1995 Stock Option Plan for Non-Employee Directors.                                                                   |   |     |   | 10-Q                             |   | March      31, 1997 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.6*            |   | Amended      1993 Equity Incentive Plan.                                                                                          |   |     |   | 10-K                             |   | December      31, 1998 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.7*            |   | 2000      Incentive Plan.                                                                                                         |   |     |   | DEFS14A                          |   | December      6, 1999 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.8*            |   | Employment      Agreement between the Company and James P. Regan.                                                                 |   |     |   | 10-K                             |   | December      31, 1999 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.9*            |   | Change      of Control Agreement between the Company and James P.    Regan.                                                       |   |     |   | 10-K                             |   | December      31, 1999 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.10*           |   | Non-qualified      Stock Option Agreement between the Company and James P.    Regan.                                              |   |     |   | S-8                              |   | October      12, 2000 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.11*           |   | 2000      Employee Stock Purchase Plan.                                                                                           |   |     |   | S-8                              |   | April      27, 2001 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.12*           |   | Special      Severance Plan.                                                                                                      |   |     |   | 10-K                             |   | December      31, 2001 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.13*           |   | Senior      Management Deferred Compensation Plan.                                                                                |   |     |   | 10-Q                             |   | March      31, 2002 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.14*           |   | Dynamics      Research Corporation Special Severance Plan, as amended on May 14,      2003.                                  |   |     |   | 10-K                             |   | December      31, 2003 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.15*           |   | 2003      Incentive Plan.                                                                                                         |   |     |   | 10-K                             |   | December      31, 2003 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.16*           |   | Form      of grant of stock options under the 2003 Incentive Plan.                                                                |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.17*           |   | Form      of grant of restricted stock under the 2003 IncentivePlan.                                                              |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.18*           |   | Form      of grant of stock options under the 2000 Incentive Plan.                                                                |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |
| 10.19*           |   | Deferred      Stock Compensation Plan for Non-Employee Directors, as amended for      deferrals on or after January 1, 2005. |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                              |   |     |   |                             |   |   |

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Table of Contents

|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                                                                                                                                                                             |   | Herewith |   | Form                             |   | Date |
| 10.20*           |   | Amendment      to Deferred Stock Compensation Plan for Non-Employee      Directors.                                                                                                                                                                                                                                                                                     |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.21*           |   | Beneficiary      Designation Form for the Deferred Compensation Plan for Non-Employee      Directors.                                                                                                                                                                                                                                                                   |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.22*           |   | Forms      of grant of restricted stock under the 2000 IncentivePlan.                                                                                                                                                                                                                                                                                                   |   |     |   | 10-K                             |   | December      31, 2005 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.23            |   | Purchase      and Sale Agreement, dated November 18, 2005, by and between Dynamics      Research Corporation and Direct Invest Property Acquisition,      LLC.                                                                                                                                                                                                     |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.24            |   | Amendment      to Purchase and Sale Agreement, dated December 28, 2005, by and      between Dynamics Research Corporation and Direct Invest Property      Acquisition, LLC.                                                                                                                                                                                        |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.25            |   | Lease,      dated December 28, 2005, by and between Dynamics Research Corporation      and Direct Invest-60 Frontage, LLC.                                                                                                                                                                                                                                         |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.26            |   | Consent,      Waiver and Amendment Agreement, dated December 28, 2005, by and among      Dynamics Research Corporation, Brown Brothers Harriman & Co.,      KeyBank National Association, TD Banknorth, N.A., and Bank of America,      N.A.                                                                                                              |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.27            |   | Third      Amended and Restated Loan Agreement, as of September 29, 2006, by and      among Dynamics Research Corporation, DRC International Corporation and      H.J. Ford Associates, Inc. and Brown Brothers Harriman & Co., TD      Banknorth, N.A., Bank of America, N.A.                                                                                      |   |     |   | 8-K                              |   | October      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.28            |   | Master      Unlimited Guaranty, dated as of September 29, 2006, by each of Dynamics      Research Corporation, DRC International Corporation, and H.J. Ford      Associates Inc., in favor of Brown Brothers Harriman & Co., for itself      and as Administrative Agent for each of the Lenders which are and which      may become parties to the Loan Agreement. |   |     |   | 8-K                              |   | October      4, 2006 |

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Table of Contents

|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Herewith |   | Form                             |   | Date |
| 10.29            |   | First      Amendment to Third Amended and Restated Loan Agreement by and among      Dynamics Research Corporation, DRC International Corporation, and H.J.      Ford Associates, Inc. and Brown Brothers Harriman & Co., TD Banknorth,      N.A. and Bank of America, N.A.                                                                                                                                                                                                 |   |     |   | 8-K                              |   | May      14, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.30            |   | Fourth      Amended and Restated Loan Agreement by and among Dynamics Research      Corporation, DRC International Corporation, H.J. Ford Associates,      Inc., Kadix Systems, LLC as the Borrowers, and The Lenders Party      hereto and Brown Brothers Harriman & Co., as Administrative Agent and      TD Bank, N.A. as Documentation Agent and Bank of America, N.A. as      Syndication Agent, as of August 1, 2008.                            |   |     |   | 8-K                              |   | August      5, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.31            |   | Pledge      Agreement by and between Dynamics Research Corporation and Brown Brothers      Harriman & Co., for itself and as Administrative Agent for each of the      Lenders which are and which may become parties to the Loan Agreement, as      of August 1, 2008.                                                                                                                                                                                                    |   |     |   | 8-K                              |   | August      5, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.32            |   | First      Amendment to Fourth Amended and Restated Loan Agreement by and among      Dynamics Research Corporation, DRC International Corporation, H.J. Ford      Associates, Inc., Kadix Systems, LLC as the Borrowers, and The      Lenders Party hereto and Brown Brothers Harriman & Co., as      Administrative Agent and TD Bank, N.A. as Documentation Agent and Bank of      America, N.A. as Syndication Agent, as of December 31,      2008. |   |     |   | 10-K                             |   | December      31, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 21.1             |   | Subsidiaries      of the registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 23.1             |   | Consent      of Independent Registered Public Accounting Firm (Grant Thornton      LLP).                                                                                                                                                                                                                                                                                                                                                                                       |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 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.                                                                                                                                                                                                                                                              |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |

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Table of Contents

|             |   |                                                                                                                                                                                                              |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                       |   | Herewith |   | Form                             |   | Date |
| 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. |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 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.                              |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 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.                              |   | X        |   |                             |   |   |

|   |  *  | Management      contract or compensatory plan or arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | **       | In      accordance with Rule 12b-32 under the Securities Exchange Act of      1934, as amended, reference is made to the documents previously filed with      the Securities and Exchange Commission, which documents are hereby      incorporated by reference.  The dates listed for Forms 8-A12G,      Forms 8-K, Forms DEFS14A and Forms S-8 are dates the respective forms were      filed on, and dates listed for Forms 10-Q and Forms 10-K are for the      quarterly or annual period endeddates. |

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