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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, 2010                                              |
|   | 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.                                                                              | o                              |
| 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, 2010, was $85.4 million based on the reported last sale price per share of $10.11 on that date on the NASDAQ Global Market. As of February 25, 2011, 10,078,718 shares of the registrant’s common stock, $0.10 par value, were outstanding.                                       |

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DYNAMICS RESEARCH CORPORATION

|                 | Page      |
|----------------------|-----------|
|  PART I    |      |
|                 | ITEM      |   |
|                 |  1.  | Business | 2 |
|                 |  1A. | Risk Factors | 16 |
|                 |  1B. | Unresolved Staff Comments | 26 |
|                 |  2.  | Properties | 26 |
|                 |  3.  | Legal Proceedings | 26 |
|                 |  4.  | [Removed and Reserved] | 26 |
|  PART  II  |      |
|                 | ITEM      |   |
|                 |  5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 27 |
|                 |  6.  | Selected Financial Data | 29 |
|                 |  7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31 |
|                 |  7A. | Quantitative and Qualitative Disclosures About Market Risk | 42 |
|                 |  8.  | Financial Statements and Supplementary Data | 43 |
|                 |  9.  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 76 |
|                 |  9A. | Controls and Procedures | 76 |
|                 |  9B. | Other Information | 77 |
|  PART  III |      |
|                 | ITEM      |   |
|                 |  10. | Directors, Executive Officers and Corporate Governance | 78 |
|                 |  11. | Executive Compensation | 79 |
|                 |  12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 79 |
|                 |  13. | Certain Relationships and Related Transactions, and  Director Independence | 79 |
|                 |  14. | Principal Accounting Fees and Services | 79 |
|  PART  IV  |      |
|                 | ITEM      |   |
|                 |  15. | Exhibits and Financial Statement Schedules | 80 |

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ITEM 1. BUSINESS

|   | · | Solutions.  We deliver high-value differentiated solutions to our clients.  Our five areas of differentiated expertise are business transformation, information technology, training and performance support, management services and engineering services.  We believe our solutions align well with the needs of our government customers today through improved efficiencies and effectiveness, procurement reform, transformational and technology based changes, and ongoing, changing security threats. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Markets and Customers.  We target markets, which based on long-term market force drivers, have sustained government projected demand for services.  We select customers from the spectrum of federal government departments and agencies in our target growth markets with needs that well match the solutions we provide.  Currently our target growth markets include homeland security, healthcare, cyber security, intelligence and financial/regulatory reform.  In 2010 approximately 60% of our revenue was derived from clients in these markets and selected high growth areas of defense such as unmanned aerial systems and force readiness and training. Our 2010 revenue derived from these markets grew 12% over 2009. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prime Government and Agency-Wide Contracts.  We hold an enviable portfolio of government and agency-wide multiple award schedule indefinite delivery/indefinite quantity ("ID/IQ") task order contracts.  Today, these types of contracts are the federal government’s preferred means of procurement for services. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Acquisitions.  We use acquisitions, funded through both operationally generated cash and leverage, to strengthen our position in our target growth markets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Market               |   | Sponsoring Agency                     |   | M/S(1) |   | Contract Name                                                    |
|----------------------|--------|---------------------------------------|--------|--------|--------|------------------------------------------------------------------|
| Government Wide      |   | General Services Administration       |   | M      |   | Alliant                                                          |
| Government Wide      |   | Office of Personnel Management        |   | M      |   | Training and Management Assistance (TMA)                         |
| Homeland Security    |   | Department of Homeland Security       |   | M      |   | Enterprise Acquisition Gateway to Leading Edge (EAGLE)           |
| Homeland Security    |   | Department of Homeland Security       |   | M      |   | Professional Program Management Services/Solutions (PPMSS)       |
| Financial/Regulatory |   | Department of Treasury                |   | M      |   | Treasury Information Processing Support Services (TIPSS IV)      |
| Financial/Regulatory |   | Federal Deposit Insurance Corporation |   | S      |   | Business Analysis Management Support Services(BAMSS)             |
| Healthcare           |   | TRICARE (Department of Defense)       |   | M      |   | Evaluation, Analysis, Management & Support (TEAMS)           |
| Intelligence         |   | Maryland Procurement Office           |   | S      |   | BajaSands                                                        |
| Readiness            |   | Army Training and Doctrine Command    |   | M      |   | Simulation & Training Omnibus Contract (STOC II)             |
| Readiness            |   | Army Research Institute               |   | M      |   | Research, Development & Analysis in Army Training (TRAIN II) |
| Readiness            |   | Department of Defense                 |   | M      |   | Logistics Management Support Services (LMSS)                     |
| Readiness            |   | U.S. Air Force                        |   | M      |   | Enterprise Integration Services Management (NETCENTS EISM)       |
| Readiness            |   | U.S. Air Force                        |   | M      |   | Design Engineering Support Program (DESP II)                     |

| (1) | M = Multiple Award; S = Single Award |
|-----|--------------------------------------|

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ITEM 1A. RISK FACTORS

|   | • | decreases in spending by agencies or programs we support;                                                |
|--------|---------|----------------------------------------------------------------------------------------------------------|
|   | • | changes in funding priorities within the U.S. Government;                                                |
|   | • | 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;                       |
|   | • | increased allocation of federal contracts to small minority-owned or disadvantaged businesses;           |
|   | • | failure of Congress to continue funding of programs that extend over multiple fiscal years;              |
|   | • | 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; and                                                                        |
|    | • | claim rights in products and systems produced by us.                                                                                                                                                                                                               |

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

|         | • | 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.                                                                                                                                     |

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|         | • | 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. |

|         | • | we would be required to reimburse the government for amounts previously received;                            |
|--------------|---------|--------------------------------------------------------------------------------------------------------------|
|    | • | our pricing on contracts may be prospectively reduced;                                                       |
|    | • | payments to us may be significant delayed or withheld; and                                                   |
|    | • | our ability to compete may be impaired by negative audit reports or by the failure to receive audit reports. |

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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.                                                             |

|   | • | 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. |

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|   | • | decreases in our earnings and revenue or quarterly operating results;                                                                                                                                                                            |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | changes in estimates by analysts;                                                                                                                                                                                                                |
|   | • | repurchases of our common stock under our share repurchase program, pursuant to which we are authorized to purchase up to 700,000 shares of our common stock through June 6, 2011, under which 40,400 shares have been repurchased to date; |
|   | • | market conditions in the industry;                                                                                                                                                                                                               |
|   | • | announcements and new developments by competitors; and                                                                                                                                                                                           |
|   | • | regulatory reviews.                                                                                                                                                                                                                              |

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ITEM 3. LEGAL PROCEEDINGS

ITEM 4. [REMOVED AND RESERVED]

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ITEM 5. MARKET FOR RESISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

|                                           |   | High   |   |   | Low    |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|
|  Fiscal year ended December 31, 2010 |   |   |   |   |   |   |
|  First quarter                            |   | $      | 11.88  |   |   | $      | 9.92 |   |
|  Second quarter                           |   | $      | 14.31  |   |   | $      | 9.79 |   |
|  Third quarter                            |   | $      | 10.69  |   |   | $      | 8.58 |   |
|  Fourth quarter                           |   | $      | 14.10  |   |   | $      | 10.10 |   |
|                                           |   |   |   |   |   |   |   |   |
|  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 |   |

|                                             |   |         |   |   |      |   |   |            |   |   | Approximate                  |   |
|--------------------------------------------------|--------|--------------|--------|--------|-----------|--------|--------|-----------------|--------|--------|------------------------------|--------|
|                                             |   |         |   |   |      |   |   |            |   |   |  Dollar                 |   |
|                                             |   |         |   |   |      |   |   | Total           |   |   | Value                        |   |
|                                             |   |         |   |   |      |   |   | Numberof Shares |   |   | of Shares that May |   |
|                                             |   |         |   |   | Average   |   |   | Purchased       |   |   | Yet Be                       |   |
|                                             |   | Total        |   |   | Price     |   |   | as Part of      |   |   | Purchased                    |   |
|                                             |   | Number       |   |   | Paid      |   |   | Publicly        |   |   | Under the                    |   |
|                                             |   | of Shares    |   |   |  Per |   |   | Announced       |   |   | Programs                     |   |
|  Period                                     |   | Purchased(1) |   |   | Share     |   |   | Programs        |   |   | (in millions)                |   |
| October 1, 2010 to October 31, 2010              |   |         | 8,293  |   |      | $      | 11.14  |            |   |   | -                            |   |   | $ | - |   |
| November 1, 2010 to November 30, 2010            |   |         | 1,016  |   |      | $      | 11.49  |            |   |   | -                            |   |   |   | - |   |
| December 1, 2010 to  December 31, 2010 |   |         | 40,400 |   |      | $      | 13.60  |            |   |   | 40,400                       |   |   |   | 8.8 |   |
| Total                                            |   |         | 49,709 |   |      | $      | 13.15  |            |   |   | 40,400                       |   |   | $ | 8.8 |   |

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| (1)  | During the month of December, we repurchased 40,400 shares under a repurchase program approved by our Board of Directors that was publically announced on December 6, 2010.  Overall, the Board of Directors authorized the repurchase of 700,000 shares.  At December 31, 2010, there were 659,600 shares remaining under the repurchase program which shares may be repurchased through June 6, 2011. The approximate dollar value of shares available to be repurchased was calculated using DRC’s stock price of $13.40 at December 31, 2010.  The remaining shares repurchased in the months of October and November represented shares repurchased to cover option costs in connection with the exercise of stock options and payroll withholding taxes in connection with the vesting of restricted stock awards. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | December 31, |   |
|------------------------------------|--------|--------------|--------|
|                               |   | 2005         |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Dynamics Research Corporation      |   | $            | 100.00 |   |   | $ | 63.11 |   |   | $ | 70.03 |   |   | $ | 51.78 |   |   | $ | 68.67 |   |   | $ | 86.73 |   |
| NASDAQ Stock Market (US Companies) |   | $            | 100.00 |   |   | $ | 109.52 |   |   | $ | 120.27 |   |   | $ | 71.51 |   |   | $ | 102.89 |   |   | $ | 120.29 |   |
| Peer Group                         |   | $            | 100.00 |   |   | $ | 101.95 |   |   | $ | 105.79 |   |   | $ | 102.53 |   |   | $ | 103.28 |   |   | $ | 102.38 |   |

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ITEM 6. SELECTED FINANCIAL DATA

|                                                                                   |   | Year Ended December 31, |    |
|----------------------------------------------------------------------------------------|--------|------------------------------|---------|
| (dollars in thousands, except per share data)                                          |   | 2010                         |    |   | 2009 |   |   | 2008(1) |   |   | 2007 |   |   | 2006 |   |
| Revenue                                                                                |   | $                            | 272,065 |   |   | $ | 268,661 |   |   | $ | 236,796 |   |   | $ | 224,676 |   |   | $ | 252,890 |   |
| Gross profit                                                                           |   | $                            | 43,890  |   |   | $ | 44,967 |   |   | $ | 38,994 |   |   | $ | 37,160 |   |   | $ | 33,914 |   |
| Operating income (loss)                                                                |   | $                            | 20,815  |   |   | $ | 17,908 |   |   | $ | (150 | ) |   | $ | 13,104 |   |   | $ | 7,507 |   |
| Income (loss) from continuing operations                                               |   | $                            | 12,313  |   |   | $ | 10,313 |   |   | $ | (1,084 | ) |   | $ | 7,413 |   |   | $ | 3,578 |   |
| Income (loss) from discontinued operations                                             |   |                         | 392     |   |   |   | (141 | ) |   |   | (171 | ) |   |   | (311 | ) |   |   | 410 |   |
| Cumulative benefit of accounting change                                                |   |                         | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 84 |   |
| Net income (loss)                                                                      |   | $                            | 12,705  |   |   | $ | 10,172 |   |   | $ | (1,255 | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |
|                                                                                   |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share - Basic                                                 |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations before cumulative effect of accounting change |   | $                            | 1.24    |   |   | $ | 1.08 |   |   | $ | (0.11 | ) |   | $ | 0.79 |   |   | $ | 0.39 |   |
| Income (loss) from discontinued operations                                             |   |                         | 0.04    |   |   |   | (0.02 | ) |   |   | (0.02 | ) |   |   | (0.03 | ) |   |   | 0.05 |   |
| Cumulative benefit of accounting change                                                |   |                         | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.01 |   |
| Net earnings (loss) per share - Basic                                             |   | $                            | 1.28    |   |   | $ | 1.06 |   |   | $ | (0.13 | ) |   | $ | 0.76 |   |   | $ | 0.45 |   |
|                                                                                   |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share - Diluted                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations before cumulative effect of accounting change |   | $                            | 1.22    |   |   | $ | 1.06 |   |   | $ | (0.11 | ) |   | $ | 0.77 |   |   | $ | 0.38 |   |
| Income (loss) from discontinued operations                                             |   |                         | 0.04    |   |   |   | (0.02 | ) |   |   | (0.02 | ) |   |   | (0.03 | ) |   |   | 0.04 |   |
| Cumulative benefit of accounting change                                                |   |                         | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.01 |   |
| Net earnings (loss) per share - Diluted                                           |   | $                            | 1.26    |   |   | $ | 1.04 |   |   | $ | (0.13 | ) |   | $ | 0.74 |   |   | $ | 0.43 |   |
|                                                                                   |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net cash provided by operating activities from continuing operations             |   | $                            | 41,331  |   |   | $ | 8,208 |   |   | $ | 18,582 |   |   | $ | 3,487 |   |   | $ | 18,301 |   |
| Capital expenditures                                                                   |   | $                            | 4,449   |   |   | $ | 5,185 |   |   | $ | 1,973 |   |   | $ | 1,676 |   |   | $ | 1,887 |   |
| Depreciation                                                                           |   | $                            | 3,564   |   |   | $ | 2,987 |   |   | $ | 2,961 |   |   | $ | 2,869 |   |   | $ | 2,837 |   |
| EBITDA(2)                                                                              |   | $                            | 26,373  |   |   | $ | 24,891 |   |   | $ | 5,466 |   |   | $ | 19,404 |   |   | $ | 13,742 |   |

|                                          |   | As of December 31, |       |
|-----------------------------------------------|--------|-------------------------|------------|
| (dollars in thousands, except per share data) |   | 2010                    |       |   | 2009 |   |   | 2008(1) |   |   | 2007 |   |   | 2006 |   |
| Total assets                                  |   | $                       | 198,216    |   |   | $ | 203,601 |   |   | $ | 208,930 |   |   | $ | 149,953 |   |   | $ | 159,852 |   |
| Total debt                                    |   | $                       | 22,000     |   |   | $ | 31,973 |   |   | $ | 38,000 |   |   | $ | 7,737 |   |   | $ | 15,000 |   |
| Other long-term liabilities                   |   | $                       | 27,067     |   |   | $ | 31,936 |   |   | $ | 30,286 |   |   | $ | 8,576 |   |   | $ | 12,805 |   |
| Stockholders’ equity                    |   | $                       | 107,185    |   |   | $ | 94,096 |   |   | $ | 81,475 |   |   | $ | 96,504 |   |   | $ | 84,314 |   |
| Return on invested capital(3)                 |   |                    | 12.8       | % |   |   | 8.8 | % |   |   | (0.1 | )% |   |   | 7.7 | % |   |   | 4.9 | % |
| Stockholders’ equity per share(4)       |   | $                       | 10.68      |   |   | $ | 9.48 |   |   | $ | 8.42 |   |   | $ | 10.15 |   |   | $ | 9.05 |   |
| Return on stockholders’ equity(5)       |   |                    | 11.9       | % |   |   | 10.8 | % |   |   | (1.5 | )% |   |   | 7.4 | % |   |   | 4.8 | % |
| Funded backlog                                |   | $                       | 133,516    |   |   | $ | 158,518 |   |   | $ | 146,619 |   |   | $ | 115,155 |   |   | $ | 91,884 |   |
| Number of shares outstanding                  |   |                    | 10,040,029 |   |   |   | 9,923,357 |   |   |   | 9,674,512 |   |   |   | 9,509,849 |   |   |   | 9,314,962 |   |

| (1)  | Amounts include results of operations of Kadix (acquired August 1, 2008) for the period subsequent to our acquisition. |
|-----------|-----------------------------------------------------------------------------------------------------------------------------|

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| (2)  | 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.  We have provided EBITDA because it is a component of our debt covenants calculations and we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate performance and to enhance investors’ understanding of our operating results. EBITDA should not be construed as an alternative measure of net income, income from continuing operations or cash flows.  Reconciliation of net income to EBITDA is as follows: |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | Year Ended December 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
| (in thousands)                             |   | 2010                         |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Net income (loss)                          |   | $                            | 12,705 |   |   | $ | 10,172 |   |   | $ | (1,255 | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |
| Loss (income) from discontinued operations |   |                         | (392   | ) |   |   | 141 |   |   |   | 171 |   |   |   | 311 |   |   |   | (410 | ) |
| Cumulative benefit of accounting change    |   |                         | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (84 | ) |
| Income (loss) from continuing operations   |   |                         | 12,313 |   |   |   | 10,313 |   |   |   | (1,084 | ) |   |   | 7,413 |   |   |   | 3,578 |   |
| Interest expense, net                      |   |                         | 1,084  |   |   |   | 2,024 |   |   |   | 1,423 |   |   |   | 1,541 |   |   |   | 2,042 |   |
| Provision (benefit) for income taxes       |   |                         | 7,871  |   |   |   | 6,262 |   |   |   | (454 | ) |   |   | 4,979 |   |   |   | 2,476 |   |
| Depreciation expense                       |   |                         | 3,564  |   |   |   | 2,987 |   |   |   | 2,961 |   |   |   | 2,869 |   |   |   | 2,837 |   |
| Amortization expense                       |   |                         | 1,541  |   |   |   | 3,305 |   |   |   | 2,620 |   |   |   | 2,602 |   |   |   | 2,809 |   |
| EBITDA                                     |   | $                            | 26,373 |   |   | $ | 24,891 |   |   | $ | 5,466 |   |   | $ | 19,404 |   |   | $ | 13,742 |   |

| (3)    | Return on invested capital is calculated by dividing operating income, 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. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                            |
| (4)    | Stockholders’ equity per share is calculated by dividing ending stockholders’ equity by the number of shares outstanding at the end of the period.                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                            |
| (5)    | Return on stockholders’ equity is calculated by dividing net income by ending stockholders equity.                                                                                                                                                                                                        |

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

|   | · | Solutions.  We deliver high-value differentiated solutions to our clients.  Our five areas of differentiated expertise are business transformation, information technology, training and performance support, management services and engineering services.  We believe our solutions align well with the needs of our government customers today through improved efficiencies and effectiveness, procurement reform, transformational and technology based changes, and ongoing, changing security threats. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Markets and Customers.  We target markets, which based on long-term market force drivers, have sustained government projected demand for services.  We select customers from the spectrum of federal government departments and agencies in our target growth markets with needs that well match the solutions we provide.  Currently our target growth markets include homeland security, healthcare, cyber security, intelligence and financial/regulatory reform.  In 2010 approximately 60% of our revenue was derived from clients in these markets and selected high growth areas of defense such as unmanned aerial systems and force readiness and training. Our 2010 revenue derived from these markets grew 12% over 2009. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prime Government and Agency-Wide Contracts.  We hold an enviable portfolio of government and agency-wide multiple award schedule ID/IQ task order contracts.  Today, these types of contracts are the federal government’s preferred means of procurement for services. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Acquisitions.  We use acquisitions, funded through both operationally generated cash and leverage, to strengthen our position in our target growth markets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                           |   | Year Ended December 31, |   |
|------------------------------------------------|--------|-------------------------|--------|
| (in millions)                                  |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|  Revenue                                  |   | $                       | 272.1  |   |   |   |   | $ | 268.7 |   |   |   |   | $ | 236.8 |   |   |   |
|  Gross profit                             |   | $                       | 43.9   |   |   | 16.1 | % |   | $ | 45.0 |   |   | 16.7 | % |   | $ | 39.0 |   |   | 16.5 | % |
|                                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling, general and administrative      |   |                    | 21.5   |   |   | 7.9 | % |   |   | 23.8 |   |   | 8.8 | % |   |   | 36.5 |   |   | 15.4 | % |
|  Amortization of intangible assets        |   |                    | 1.5    |   |   | 0.6 | % |   |   | 3.3 |   |   | 1.2 | % |   |   | 2.6 |   |   | 1.1 | % |
|  Operating Income (loss) (1)              |   |                    | 20.8   |   |   | 7.7 | % |   |   | 17.9 |   |   | 6.7 | % |   |   | (0.1 | ) |   | (0.1 | )% |
|  Interest expense, net                    |   |                    | (1.1   | ) |   | (0.4 | )% |   |   | (2.0 | ) |   | (0.8 | )% |   |   | (1.4 | ) |   | (0.6 | )% |
|  Other income, net                        |   |                    | 0.5    |   |   | 0.2 | % |   |   | 0.7 |   |   | 0.3 | % |   |   | 0.0 |   |   | 0.0 | % |
|  Provision (benefit) for income taxes (2) |   |                    | 7.9    |   |   | 39.0 | % |   |   | 6.3 |   |   | 37.8 | % |   |   | (0.5 | ) |   | 29.5 | % |
|  Gain (loss) on discontinued operations   |   |                    | 0.4    |   |   | 0.1 | % |   |   | (0.1 | ) |   | (0.1 | )% |   |   | (0.2 | ) |   | (0.1 | )% |
|  Net income (loss) (1)                    |   | $                       | 12.7   |   |   | 4.7 | % |   | $ | 10.2 |   |   | 3.8 | % |   | $ | (1.3 | ) |   | (0.5 | )% |

| (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 income taxes. |

|                                       |   | Year Ended December 31, |   |
|--------------------------------------------|--------|-------------------------|--------|
| (in millions)                              |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| National defense and intelligence agencies |   | $                       | 179.7  |   |   | 66.1 | % |   | $ | 163.2 |   |   | 60.8 | % |   | $ | 162.0 |   |   | 68.4 | % |
| Homeland security                          |   |                    | 50.5   |   |   | 18.5 |   |   |   | 54.6 |   |   | 20.3 |   |   |   | 19.4 |   |   | 8.2 |   |
| Federal civilian agencies (1)              |   |                    | 23.9   |   |   | 8.8 |   |   |   | 26.5 |   |   | 9.9 |   |   |   | 29.4 |   |   | 12.4 |   |
| Total revenue from federal agencies        |   |                    | 254.1  |   |   | 93.4 |   |   |   | 244.3 |   |   | 90.9 |   |   |   | 210.8 |   |   | 89.0 |   |
| State and local government agencies        |   |                    | 17.9   |   |   | 6.6 |   |   |   | 24.0 |   |   | 8.9 |   |   |   | 25.6 |   |   | 10.8 |   |
| Other                                      |   |                    | 0.1    |   |   | 0.0 |   |   |   | 0.3 |   |   | 0.1 |   |   |   | 0.5 |   |   | 0.2 |   |
| Total revenue (1)                          |   | $                       | 272.1  |   |   | 100.0 | % |   | $ | 268.7 |   |   | 100.0 | % |   | $ | 236.8 |   |   | 100.0 | % |

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

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|                                                |   | Year Ended December 31, |   |
|-----------------------------------------------------|--------|-------------------------|--------|
|                                                |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|  Fixed price, including service type contracts |   |                    | 47     | % |   |   | 40 | % |   |   | 33 | % |
|  Time and materials                            |   |                    | 32     |   |   |   | 42 |   |   |   | 49 |   |
|  Cost reimbursable                             |   |                    | 21     |   |   |   | 18 |   |   |   | 18 |   |
|                                                |   |                    | 100    | % |   |   | 100 | % |   |   | 100 | % |
|                                                |   |                    |   |   |   |   |   |   |   |   |   |   |
|  Prime contract                                |   |                    | 73     | % |   |   | 71 | % |   |   | 63 | % |
|  Sub-contract                                  |   |                    | 27     |   |   |   | 29 |   |   |   | 37 |   |
|                                                |   |                    | 100    | % |   |   | 100 | % |   |   | 100 | % |

| Market               |   | Sponsoring Agency                     |   | M/S(1) |   | Contract Name                                                    |
|----------------------|--------|---------------------------------------|--------|--------|--------|------------------------------------------------------------------|
| Government Wide      |   | General Services Administration       |   | M      |   | Alliant                                                          |
| Government Wide      |   | Office of Personnel Management        |   | M      |   | Training and Management Assistance (TMA)                         |
| Homeland Security    |   | Department of Homeland Security       |   | M      |   | Enterprise Acquisition Gateway to Leading Edge (EAGLE)           |
| Homeland Security    |   | Department of Homeland Security       |   | M      |   | Professional Program Management Services/Solutions (PPMSS)       |
| Financial/Regulatory |   | Department of Treasury                |   | M      |   | Treasury Information Processing Support Services (TIPSS IV)      |
| Financial/Regulatory |   | Federal Deposit Insurance Corporation |   | S      |   | Business Analysis Management Support Services(BAMSS)             |
| Healthcare           |   | TRICARE (Department of Defense)       |   | M      |   | Evaluation, Analysis, Management & Support (TEAMS)           |
| Intelligence         |   | Maryland Procurement Office           |   | S      |   | BajaSands                                                        |
| Readiness            |   | Army Training and Doctrine Command    |   | M      |   | Simulation & Training Omnibus Contract (STOC II)             |
| Readiness            |   | Army Research Institute               |   | M      |   | Research, Development & Analysis in Army Training (TRAIN II) |
| Readiness            |   | Department of Defense                 |   | M      |   | Logistics Management Support Services (LMSS)                     |
| Readiness            |   | U.S. Air Force                        |   | M      |   | Enterprise Integration Services Management (NETCENTS EISM)       |
| Readiness            |   | U.S. Air Force                        |   | M      |   | Design Engineering Support Program (DESP II)                     |

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|            |   | Year Ended December 31, |   |
|-----------------|--------|------------------------------|--------|
| (in millions)   |   | 2010                         |   |   | 2009 |   |   | 2008 |   |
| Backlog:        |   |                         |   |   |   |   |   |   |   |
| Funded          |   | $                            | 133.5  |   |   | $ | 158.5 |   |   | $ | 146.6 |   |
| Unfunded        |   |                         | 267.4  |   |   |   | 276.0 |   |   |   | 211.0 |   |
| Total           |   | $                            | 400.9  |   |   | $ | 434.5 |   |   | $ | 357.6 |   |
| Funded Bookings |   | $                            | 272.1  |   |   | $ | 282.3 |   |   | $ | 262.8 |   |

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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                          |   | $                      | 22.0   |   |   | $ | 8.0 |   |   | $ | 14.0 |   |   | $ | - |   |   | $ | - |   |
| Interest payments                                |   |                   | 0.8    |   |   |   | 0.5 |   |   |   | 0.4 |   |   |   | - |   |   |   | - |   |
| Operating lease payments                         |   |                   | 38.1   |   |   |   | 6.6 |   |   |   | 12.7 |   |   |   | 11.7 |   |   |   | 7.0 |   |
| Total contractual obligation payments            |   | $                      | 60.9   |   |   | $ | 15.1 |   |   | $ | 27.1 |   |   | $ | 11.7 |   |   | $ | 7.0 |   |
| Contractually obligated operating lease receipts |   | $                      | 9.2    |   |   | $ | 2.3 |   |   | $ | 3.5 |   |   | $ | 3.5 |   |   | $ | - |   |

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

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                                                                                                                      | Page |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------|
|  Report of Independent Registered Public Accounting Firm                                                                                             | 44   |
|  Consolidated Balance Sheets as of December 31, 2010 and 2009                                                                                   | 45   |
|  Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008                                                     | 46   |
|  Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the years ended December 31, 2010, 2009 and 2008 | 47   |
|  Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008                                                     | 48   |
|  Notes to Consolidated Financial Statements                                                                                                          | 49   |
|  Schedule II — Valuation and Qualifying Accounts and Reserves                                                                        | 75   |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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DYNAMICS RESEARCH CORPORATION

|                                                                                                                                                            |   | December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                                                                                            |   | 2010         |    |   | 2009 |   |
| Assets                                                                                                                                                          |   |         |    |   |   |   |
| Current assets                                                                                                                                                  |   |         |    |   |   |   |
| Cash and cash equivalents                                                                                                                                       |   | $            | 30,163  |   |   | $ | 55 |   |
| Contract receivables, net                                                                                                                                       |   |         | 48,394  |   |   |   | 72,569 |   |
| Prepaid expenses and other current assets                                                                                                                       |   |         | 2,924   |   |   |   | 5,702 |   |
| Discontinued operations                                                                                                                                         |   |         | -       |   |   |   | 2,058 |   |
| Total current assets                                                                                                                                            |   |         | 81,481  |   |   |   | 80,384 |   |
| Noncurrent assets                                                                                                                                               |   |         |    |   |   |   |   |   |
| Property and equipment, net                                                                                                                                     |   |         | 12,219  |   |   |   | 13,915 |   |
| Goodwill                                                                                                                                                        |   |         | 97,641  |   |   |   | 97,641 |   |
| Intangible assets, net                                                                                                                                          |   |         | 2,533   |   |   |   | 4,074 |   |
| Deferred tax asset                                                                                                                                              |   |         | 585     |   |   |   | 4,252 |   |
| Other noncurrent assets                                                                                                                                         |   |         | 3,757   |   |   |   | 3,335 |   |
| Total noncurrent assets                                                                                                                                         |   |         | 116,735 |   |   |   | 123,217 |   |
| Total assets                                                                                                                                                    |   | $            | 198,216 |   |   | $ | 203,601 |   |
|                                                                                                                                                            |   |         |    |   |   |   |   |   |
| Liabilities and stockholders' equity                                                                                                                            |   |         |    |   |   |   |   |   |
| Current liabilities                                                                                                                                             |   |         |    |   |   |   |   |   |
| Current portion of long-term debt                                                                                                                               |   | $            | 8,000   |   |   | $ | 8,000 |   |
| Accounts payable                                                                                                                                                |   |         | 16,883  |   |   |   | 18,299 |   |
| Accrued compensation and employee benefits                                                                                                                      |   |         | 18,046  |   |   |   | 16,357 |   |
| Deferred tax liability                                                                                                                                          |   |         | 2,418   |   |   |   | 7,046 |   |
| Other accrued expenses                                                                                                                                          |   |         | 4,617   |   |   |   | 3,708 |   |
| Discontinued operations                                                                                                                                         |   |         | -       |   |   |   | 186 |   |
| Total current liabilities                                                                                                                                       |   |         | 49,964  |   |   |   | 53,596 |   |
| Long-term liabilities                                                                                                                                           |   |         |    |   |   |   |   |   |
| Long-term debt                                                                                                                                                  |   |         | 14,000  |   |   |   | 23,973 |   |
| Other long-term liabilities                                                                                                                                     |   |         | 27,067  |   |   |   | 31,936 |   |
| Total long-term liabilities                                                                                                                                     |   |         | 41,067  |   |   |   | 55,909 |   |
| Total liabilities                                                                                                                                               |   |         | 91,031  |   |   |   | 109,505 |   |
| 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; 10,040,029 and 9,923,357 shares issued and outstanding at December 31, 2010 and 2009, respectively |   |         | 1,004   |   |   |   | 992 |   |
| Capital in excess of par value                                                                                                                                  |   |         | 54,138  |   |   |   | 52,580 |   |
| Accumulated other comprehensive loss, net of tax                                                                                                                |   |         | (21,691 | ) |   |   | (20,505 | ) |
| Retained earnings                                                                                                                                               |   |         | 73,734  |   |   |   | 61,029 |   |
| Total stockholders' equity                                                                                                                                      |   |         | 107,185 |   |   |   | 94,096 |   |
| Total liabilities and stockholders' equity                                                                                                                      |   | $            | 198,216 |   |   | $ | 203,601 |   |

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DYNAMICS RESEARCH CORPORATION

|                                                                       |   | Year Ended December 31, |       |
|----------------------------------------------------------------------------|--------|-------------------------|------------|
|                                                                       |   | 2010                    |       |   | 2009 |   |   | 2008 |   |
| Revenue                                                                    |   | $                       | 272,065    |   |   | $ | 268,661 |   |   | $ | 236,796 |   |
| Cost of revenue                                                            |   |                    | 228,175    |   |   |   | 223,694 |   |   |   | 197,802 |   |
| Gross profit                                                               |   |                    | 43,890     |   |   |   | 44,967 |   |   |   | 38,994 |   |
|                                                                       |   |                    |       |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses                               |   |                    | 21,534     |   |   |   | 23,754 |   |   |   | 36,524 |   |
| Amortization of intangible assets                                          |   |                    | 1,541      |   |   |   | 3,305 |   |   |   | 2,620 |   |
| Operating income (loss)                                                    |   |                    | 20,815     |   |   |   | 17,908 |   |   |   | (150 | ) |
| Interest expense, net                                                      |   |                    | (1,084     | ) |   |   | (2,024 | ) |   |   | (1,423 | ) |
| Other income, net                                                          |   |                    | 453        |   |   |   | 691 |   |   |   | 35 |   |
| Income (loss) from continuing operations before provision for income taxes |   |                    | 20,184     |   |   |   | 16,575 |   |   |   | (1,538 | ) |
| Provision (benefit) for income taxes                                       |   |                    | 7,871      |   |   |   | 6,262 |   |   |   | (454 | ) |
| Income (loss) from continuing operations                                   |   |                    | 12,313     |   |   |   | 10,313 |   |   |   | (1,084 | ) |
| Gain (loss) from discontinued operations (Note 3)                          |   |                    | 392        |   |   |   | (141 | ) |   |   | (171 | ) |
| Net income (loss)                                                          |   | $                       | 12,705     |   |   | $ | 10,172 |   |   | $ | (1,255 | ) |
|                                                                       |   |                    |       |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per common share                                           |   |                    |       |   |   |   |   |   |   |   |   |   |
| Basic                                                                      |   |                    |       |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                   |   | $                       | 1.24       |   |   | $ | 1.08 |   |   | $ | (0.11 | ) |
| Gain (loss) from discontinued operations                                   |   |                    | 0.04       |   |   |   | (0.02 | ) |   |   | (0.02 | ) |
| Net income (loss)                                                          |   | $                       | 1.28       |   |   | $ | 1.06 |   |   | $ | (0.13 | ) |
|                                                                       |   |                    |       |   |   |   |   |   |   |   |   |   |
| Diluted                                                                    |   |                    |       |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                   |   | $                       | 1.22       |   |   | $ | 1.06 |   |   | $ | (0.11 | ) |
| Gain (loss) from discontinued operations                                   |   |                    | 0.04       |   |   |   | (0.02 | ) |   |   | (0.02 | ) |
| Net income (loss)                                                          |   | $                       | 1.26       |   |   | $ | 1.04 |   |   | $ | (0.13 | ) |
|                                                                       |   |                    |       |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                        |   |                    |       |   |   |   |   |   |   |   |   |   |
| Basic                                                                      |   |                    | 9,893,322  |   |   |   | 9,551,614 |   |   |   | 9,493,495 |   |
| Diluted                                                                    |   |                    | 10,078,937 |   |   |   | 9,772,722 |   |   |   | 9,493,495 |   |

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DYNAMICS RESEARCH CORPORATION

|                                                                                     |   |   |   |   |      |   |   | Capital   |   |   | Accumulated   |   |   |     |    |   |
|------------------------------------------------------------------------------------------|--------|--------|--------|--------|-----------|--------|--------|-----------|--------|--------|---------------|--------|--------|----------|---------|--------|
|                                                                                     |   | Common |   |   | Common    |   |   | In Excess |   |   | Other         |   |   |     |    |   |
|                                                                                     |   | Stock  |   |   | Stock     |   |   | of Par    |   |   | Comprehensive |   |   | Retained |    |   |   |
|                                                                                     |   | Shares |   |   | Par Value |   |   | Value     |   |   | Loss          |   |   | Earnings |    | Total  |
| Balance at December 31, 2007                                                             |   |   | 9,510  |   |      | $      | 951    |      |   | $      | 50,251        |   |   | $        | (6,745  | )      |   | $ | 52,112 |   | $ | 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 |   |
| Comprehensive income:                                                                    |   |   |   |   |      |   |   |      |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |
| Net income                                                                               |   |   | -      |   |      |   | -      |      |   |   | -             |   |   |     | -       |   |   |   | 12,705 |   |   | 12,705 |   |
| Other comprehensive loss, net of tax:                                                    |   |   |   |   |      |   |   |      |   |   |          |   |   |     |    |   |   |   |   |   |   |   |   |
| Pension liability adjustment, net of reclassification adjustment                         |   |   | -      |   |      |   | -      |      |   |   | -             |   |   |     | (1,247  | )      |   |   | - |   |   | (1,247 | ) |
| Changes in unrealized loss on derivative instruments, net of reclassification adjustment |   |   | -      |   |      |   | -      |      |   |   | -             |   |   |     | 61      |   |   |   | - |   |   | 61 |   |
| Other comprehensive loss                                                                 |   |   |   |   |      |   |   |      |   |   |          |   |   |     |    |   |   |   |   |   |   | (1,186 | ) |
| Comprehensive income                                                                     |   |   |   |   |      |   |   |      |   |   |          |   |   |     |    |   |   |   |   |   |   | 11,519 |   |
| Issuance of common stock through stock plan transactions, net                            |   |   | 171    |   |      |   | 17     |      |   |   | 1,463         |   |   |     | -       |   |   |   | - |   |   | 1,480 |   |
| Issuance of restricted stock                                                             |   |   | 30     |   |      |   | 3      |      |   |   | (3            | )      |   |     | -       |   |   |   | - |   |   | - |   |
| Repurchased shares                                                                       |   |   | (40    | )      |      |   | (4     | )         |   |   | (546          | )      |   |     | -       |   |   |   | - |   |   | (550 | ) |
| Forfeiture of restricted stock                                                           |   |   | (24    | )      |      |   | (2     | )         |   |   | 2             |   |   |     | -       |   |   |   | - |   |   | - |   |
| Release of restricted stock                                                              |   |   | (20    | )      |      |   | (2     | )         |   |   | (219          | )      |   |     | -       |   |   |   | - |   |   | (221 | ) |
| Share-based compensation                                                                 |   |   | -      |   |      |   | -      |      |   |   | 718           |   |   |     | -       |   |   |   | - |   |   | 718 |   |
| Tax benefit from stock plan transactions                                                 |   |   | -      |   |      |   | -      |      |   |   | 143           |   |   |     | -       |   |   |   | - |   |   | 143 |   |
| Balance at December 31, 2010                                                             |   |   | 10,040 |   |      | $      | 1,004  |      |   | $      | 54,138        |   |   | $        | (21,691 | )      |   | $ | 73,734 |   | $ | 107,185 |   |

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DYNAMICS RESEARCH CORPORATION

|                                                                                 |   | Year Ended December 31, |    |
|--------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                 |   | 2010                    |    |   | 2009 |   |   | 2008 |   |
| Cash flows from operating activities:                                                |   |                    |    |   |   |   |   |   |   |
| Net income (loss)                                                                    |   | $                       | 12,705  |   |   | $ | 10,172 |   |   | $ | (1,255 | ) |
| Gain (loss) from discontinued operations                                             |   |                    | 392     |   |   |   | (141 | ) |   |   | (171 | ) |
| Income (loss) from continuing operations                                             |   |                    | 12,313  |   |   |   | 10,313 |   |   |   | (1,084 | ) |
| Adjustments to reconcile net cash provided by operating activities:                  |   |                    |    |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                         |   |                    | 3,564   |   |   |   | 2,987 |   |   |   | 2,961 |   |
| Amortization of intangible assets                                                    |   |                    | 1,541   |   |   |   | 3,305 |   |   |   | 2,620 |   |
| Share-based compensation                                                             |   |                    | 718     |   |   |   | 736 |   |   |   | 1,148 |   |
| Investment income from equity interest                                               |   |                    | (228    | ) |   |   | (355 | ) |   |   | (483 | ) |
| Tax benefit from stock plan transactions, net of tax deficiencies from equity awards |   |                    | (143    | ) |   |   | 127 |   |   |   | (103 | ) |
| Litigation settlement (payment)                                                      |   |                    | -       |   |   |   | (15,000 | ) |   |   | 14,819 |   |
| Deferred income taxes                                                                |   |                    | (183    | ) |   |   | 9,362 |   |   |   | (4,572 | ) |
| Other                                                                                |   |                    | (507    | ) |   |   | (637 | ) |   |   | (620 | ) |
| Change in operating assets and liabilities:                                          |   |                    |    |   |   |   |   |   |   |   |   |   |
| Contract receivables, net                                                            |   |                    | 24,175  |   |   |   | (1,937 | ) |   |   | 1,310 |   |
| Prepaid expenses and other current assets                                            |   |                    | 2,778   |   |   |   | (3,996 | ) |   |   | 4 |   |
| Accounts payable                                                                     |   |                    | 1,151   |   |   |   | (2,342 | ) |   |   | 3,558 |   |
| Accrued compensation and employee benefits                                           |   |                    | 1,689   |   |   |   | 2,713 |   |   |   | (1,519 | ) |
| Other accrued expenses                                                               |   |                    | 831     |   |   |   | (2,043 | ) |   |   | 2,239 |   |
| Other long-term liabilities                                                          |   |                    | (6,368  | ) |   |   | 4,975 |   |   |   | (1,696 | ) |
| Net cash provided by continuing operations                                           |   |                    | 41,331  |   |   |   | 8,208 |   |   |   | 18,582 |   |
| Net cash provided by (used in) discontinued operations                               |   |                    | (161    | ) |   |   | (280 | ) |   |   | 173 |   |
| Net cash provided by operating activities                                            |   |                    | 41,170  |   |   |   | 7,928 |   |   |   | 18,755 |   |
| Cash flows from investing activities:                                                |   |                    |    |   |   |   |   |   |   |   |   |   |
| Purchase of business, net of cash acquired                                           |   |                    | -       |   |   |   | (4,250 | ) |   |   | (43,016 | ) |
| Additions to property and equipment                                                  |   |                    | (4,449  | ) |   |   | (5,185 | ) |   |   | (1,973 | ) |
| Proceeds from the sale of business                                                   |   |                    | 1,750   |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of investments and long-lived assets                              |   |                    | 20      |   |   |   | 215 |   |   |   | 291 |   |
| Dividends from equity investment                                                     |   |                    | 207     |   |   |   | 556 |   |   |   | 423 |   |
| Payments related to sale of building                                                 |   |                    | -       |   |   |   | - |   |   |   | (35 | ) |
| Change in other assets                                                               |   |                    | 385     |   |   |   | (345 | ) |   |   | 21 |   |
| Net cash used in continuing operations                                               |   |                    | (2,087  | ) |   |   | (9,009 | ) |   |   | (44,289 | ) |
| Net cash used in discontinued operations                                             |   |                    | (75     | ) |   |   | (71 | ) |   |   | (37 | ) |
| Net cash used in investing activities                                                |   |                    | (2,162  | ) |   |   | (9,080 | ) |   |   | (44,326 | ) |
| Cash flow from financing activities:                                                 |   |                    |    |   |   |   |   |   |   |   |   |   |
| Borrowings under term loan agreement                                                 |   |                    | -       |   |   |   | - |   |   |   | 40,000 |   |
| Repayments under term loan agreement                                                 |   |                    | (8,000  | ) |   |   | (8,000 | ) |   |   | (2,000 | ) |
| Borrowings under revolving credit agreement                                          |   |                    | 34,156  |   |   |   | 79,497 |   |   |   | 69,225 |   |
| Repayments under revolving credit agreement                                          |   |                    | (36,129 | ) |   |   | (77,524 | ) |   |   | (76,962 | ) |
| Proceeds from the exercise of stock plan transactions                                |   |                    | 1,480   |   |   |   | 250 |   |   |   | 855 |   |
| Payments of repurchased shares                                                       |   |                    | (550    | ) |   |   | - |   |   |   | - |   |
| Tax benefit from stock plan transactions, net of tax deficiencies from equity awards |   |                    | 143     |   |   |   | (127 | ) |   |   | 103 |   |
| Payments of deferred financing costs                                                 |   |                    | -       |   |   |   | - |   |   |   | (545 | ) |
| Net cash provided by (used in) financing activities                                  |   |                    | (8,900  | ) |   |   | (5,904 | ) |   |   | 30,676 |   |
| Net increase (decrease) in cash and cash equivalents                                 |   |                    | 30,108  |   |   |   | (7,056 | ) |   |   | 5,105 |   |
| Cash and cash equivalents, beginning of period                                       |   |                    | 55      |   |   |   | 7,111 |   |   |   | 2,006 |   |
| Cash and cash equivalents, end of period                                             |   | $                       | 30,163  |   |   | $ | 55 |   |   | $ | 7,111 |   |
|                                                                                 |   |                    |    |   |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                    |   |                    |    |   |   |   |   |   |   |   |   |   |
| Cash paid during the year for interest                                               |   | $                       | 936     |   |   | $ | 2,350 |   |   | $ | 973 |   |
| Cash paid during the year for income taxes, net of refunds                           |   | $                       | 6,207   |   |   | $ | 522 |   |   | $ | 2,399 |   |
| Supplemental disclosure of noncash financing and investing activities:               |   |                    |    |   |   |   |   |   |   |   |   |   |
| Issuance of restricted stock                                                         |   | $                       | 333     |   |   | $ | 903 |   |   | $ | 869 |   |
| Increase (decrease) in pension liability                                             |   | $                       | 2,066   |   |   | $ | (2,630 | ) |   | $ | 24,682 |   |
| Increase (decrease) in fair value of derivative liability                            |   | $                       | (102    | ) |   | $ | (291 | ) |   | $ | 860 |   |
| Note receivable from sale of business                                                |   | $                       | 750     |   |   | $ | - |   |   | $ | - |   |
| 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, |   |
|-------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                          |   | 2010                         |   |   | 2009 |   |   | 2008 |   |
| Product revenue                                                               |   | $                            | 4,790  |   |   | $ | 6,611 |   |   | $ | 6,028 |   |
|                                                                          |   |                         |   |   |   |   |   |   |   |   |   |   |
| Gain (loss) before benefit for income taxes                                   |   | $                            | 806    |   |   | $ | (314 | ) |   | $ | (421 | ) |
| (Provision) benefit for income taxes                                          |   |                         | (322   | ) |   |   | 173 |   |   |   | 250 |   |
| Income (loss) from operations of discontinued operations, net of income taxes |   |                         | 484    |   |   |   | (141 | ) |   |   | (171 | ) |
| Loss on sale of discontinued operations, net of income taxes                  |   |                         | (92    | ) |   |   | - |   |   |   | - |   |
| Effect of discontinued operations, net of income taxes                        |   | $                            | 392    |   |   | $ | (141 | ) |   | $ | (171 | ) |

|                                      |   | December 31, |   |
|-------------------------------------------|--------|--------------|--------|
|                                      |   | 2009         |   |
| Accounts receivables                      |   | $            | 946    |   |
| Inventory                                 |   |         | 864    |   |
| Prepaid expenses and other current assets |   |         | 22     |   |
| Property and equipment, net               |   |         | 226    |   |
| Total current assets                      |   | $            | 2,058  |   |
|                                      |   |         |   |   |
| Accounts payable                          |   | $            | 186    |   |
| Total current liabilities                 |   | $            | 186    |   |

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|                |   | Year Ended   |    |
|---------------------|--------|--------------|---------|
|                |   | December 31, |    |
|                |   | 2008         |    |
|                |   | (unaudited)  |    |
| Revenue             |   | $            | 261,540 |   |
| Gross profit        |   | $            | 48,118  |   |
| Operating income    |   | $            | 4,228   |   |
| Net income          |   | $            | 692     |   |
|                |   |         |    |   |
| Earnings per share: |   |         |    |   |
| Basic               |   | $            | 0.07    |   |
| Diluted             |   | $            | 0.07    |   |

|                                                                                                   |   | December 31, |    |
|--------------------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                                   |   | 2010         |    |   | 2009 |   |
| Contract receivables, net:                                                                             |   |         |    |   |   |   |
| Billed receivables                                                                                     |   | $            | 17,123  |   |   | $ | 28,203 |   |
| Unbilled receivables(1):                                                                               |   |         |    |   |   |   |   |   |
| Revenues recorded in excess of milestone billings on fixed price contracts with the State of Tennessee |   |         | 499     |   |   |   | 18,004 |   |
| Retainages and fee withholdings                                                                        |   |         | 394     |   |   |   | 689 |   |
| Other unbilled receivables                                                                             |   |         | 30,899  |   |   |   | 26,256 |   |
| Total unbilled receivables                                                                             |   |         | 31,792  |   |   |   | 44,949 |   |
| Allowance for doubtful accounts                                                                        |   |         | (521    | ) |   |   | (583 | ) |
| Contract receivables, net                                                                              |   | $            | 48,394  |   |   | $ | 72,569 |   |
|                                                                                                   |   |         |    |   |   |   |   |   |
| Prepaid expenses and other current assets:                                                             |   |         |    |   |   |   |   |   |
| Refundable income taxes                                                                                |   | $            | -       |   |   | $ | 1,604 |   |
| Restricted cash                                                                                        |   |         | 350     |   |   |   | 262 |   |
| Other                                                                                                  |   |         | 2,574   |   |   |   | 3,836 |   |
| Prepaid expenses and other current assets                                                              |   | $            | 2,924   |   |   | $ | 5,702 |   |
|                                                                                                   |   |         |    |   |   |   |   |   |
| Property and equipment, net:                                                                           |   |         |    |   |   |   |   |   |
| Software                                                                                               |   | $            | 10,834  |   |   | $ | 12,107 |   |
| Furniture and other equipment                                                                          |   |         | 8,657   |   |   |   | 9,679 |   |
| Leasehold improvements                                                                                 |   |         | 7,104   |   |   |   | 6,445 |   |
| Production equipment                                                                                   |   |         | 341     |   |   |   | 440 |   |
| Property and equipment                                                                                 |   |         | 26,936  |   |   |   | 28,671 |   |
| Less accumulated depreciation                                                                          |   |         | (14,717 | ) |   |   | (14,756 | ) |
| Property and equipment, net                                                                            |   | $            | 12,219  |   |   | $ | 13,915 |   |
|                                                                                                   |   |         |    |   |   |   |   |   |
| Other noncurrent assets:                                                                               |   |         |    |   |   |   |   |   |
| Deferred compensation plan investments                                                                 |   | $            | 1,589   |   |   | $ | 1,378 |   |
| Equity investments                                                                                     |   |         | 999     |   |   |   | 978 |   |
| Other                                                                                                  |   |         | 1,169   |   |   |   | 979 |   |
| Other noncurrent assets                                                                                |   | $            | 3,757   |   |   | $ | 3,335 |   |
|                                                                                                   |   |         |    |   |   |   |   |   |

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|                                              |   | December 31, |   |
|---------------------------------------------------|--------|--------------|--------|
|                                              |   | 2010         |   |   | 2009 |   |
| Accrued compensation and employee benefits:       |   |         |   |   |   |   |
| Accrued compensation and related  taxes |   | $            | 8,487  |   |   | $ | 9,029 |   |
| Accrued vacation                                  |   |         | 4,008  |   |   |   | 4,724 |   |
| Accrued pension liability                         |   |         | 4,000  |   |   |   | 840 |   |
| Other                                             |   |         | 1,551  |   |   |   | 1,764 |   |
| Accrued compensation and employee benefits        |   | $            | 18,046 |   |   | $ | 16,357 |   |
|                                              |   |         |   |   |   |   |   |   |
| Other accrued expenses:                           |   |         |   |   |   |   |   |   |
| Deferred gain on sale of building                 |   | $            | 676    |   |   | $ | 676 |   |
| Deferred rent liability                           |   |         | 591    |   |   |   | 206 |   |
| Accrued income taxes                              |   |         | 390    |   |   |   | - |   |
| Other                                             |   |         | 2,960  |   |   |   | 2,826 |   |
| Other accrued expenses                            |   | $            | 4,617  |   |   | $ | 3,708 |   |
|                                              |   |         |   |   |   |   |   |   |
| Other long-term liabilities:                      |   |         |   |   |   |   |   |   |
| Accrued pension liability                         |   | $            | 16,694 |   |   | $ | 20,666 |   |
| Deferred rent liability                           |   |         | 4,185  |   |   |   | 4,951 |   |
| Deferred gain on sale of building                 |   |         | 2,705  |   |   |   | 3,381 |   |
| Deferred compensation plan liability              |   |         | 1,589  |   |   |   | 1,378 |   |
| Other                                             |   |         | 1,894  |   |   |   | 1,560 |   |
| Other long-term liabilities                       |   | $            | 27,067 |   |   | $ | 31,936 |   |

| (1) | At December 31, 2010 and 2009, $0.3 million and $0.5 million, respectively, of unbilled retainages and fee withholdings are not anticipated to be billed within twelve months. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   | December 31, 2010 |   |   | December 31, 2009 |   |
|----------------------------|--------|-------------------|--------|--------|------------------------|--------|
|                       |   |              |   |   | Accumulated            |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                       |   | Cost              |   |   | Amortization           |   |   | Net |   |   | Cost |   |   | Amortization |   |   | Net |   |
| Customer relationships     |   | $                 | 1,900  |   |                   | $      | (440 | ) |   | $ | 1,460 |   |   | $ | 13,400 |   |   | $ | (11,643 | ) |   | $ | 1,757 |   |
| Customer contracts         |   |              | 3,500  |   |                   |   | (2,857 | ) |   |   | 643 |   |   |   | 3,500 |   |   |   | (2,234 | ) |   |   | 1,266 |   |
| Non-competition agreements |   |              | 1,400  |   |                   |   | (970 | ) |   |   | 430 |   |   |   | 1,400 |   |   |   | (349 | ) |   |   | 1,051 |   |
| 8(a) contract transition   |   |              | 130    |   |                   |   | (130 | ) |   |   | - |   |   |   | 130 |   |   |   | (130 | ) |   |   | - |   |
| Total                      |   | $                 | 6,930  |   |                   | $      | (4,397 | ) |   | $ | 2,533 |   |   | $ | 18,430 |   |   | $ | (14,356 | ) |   | $ | 4,074 |   |

| Year ending December 31: |   |   |   |
|--------------------------|--------|--------|--------|
| 2011                     |   | $      | 1,188  |   |
| 2012                     |   | $      | 492    |   |
| 2013                     |   | $      | 349    |   |
| 2014                     |   | $      | 299    |   |
| 2015                     |   | $      | 205    |   |

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|                                              |   | Year Ended December 31, |   |
|---------------------------------------------------|--------|------------------------------|--------|
|                                              |   | 2010                         |   |   | 2009 |   |   | 2008 |   |
| Income (loss) from operations                     |   | $                            | 7,871  |   |   | $ | 6,262 |   |   | $ | (454 | ) |
| Gain (loss) from discontinued operations          |   |                         | 261    |   |   |   | (173 | ) |   |   | (250 | ) |
| Deficiency (benefit) from stock plan transactions |   |                         | (143   | ) |   |   | 127 |   |   |   | (103 | ) |
| Other comprehensive income (loss)                 |   |                         | (778   | ) |   |   | 1,158 |   |   |   | (10,198 | ) |
|                                              |   | $                            | 7,211  |   |   | $ | 7,374 |   |   | $ | (11,005 | ) |

|                                       |   | Year Ended December 31, |   |
|--------------------------------------------|--------|------------------------------|--------|
|                                       |   | 2010                         |   |   | 2009 |   |   | 2008 |   |
| Currently payable (receivable)             |   |                         |   |   |   |   |   |   |   |
| Federal                                    |   | $                            | 7,368  |   |   | $ | (2,997 | ) |   | $ | 3,429 |   |
| State                                      |   |                         | 686    |   |   |   | (103 | ) |   |   | 689 |   |
| Total currently payable (receivable)       |   |                         | 8,054  |   |   |   | (3,100 | ) |   |   | 4,118 |   |
| Deferred payable (prepaid)                 |   |                         |   |   |   |   |   |   |   |   |   |   |
| Federal                                    |   |                         | (984   | ) |   |   | 8,367 |   |   |   | (3,692 | ) |
| State                                      |   |                         | 801    |   |   |   | 995 |   |   |   | (880 | ) |
| Total deferred payable (prepaid)           |   |                         | (183   | ) |   |   | 9,362 |   |   |   | (4,572 | ) |
|  Provision (benefit) for income taxes |   | $                            | 7,871  |   |   | $ | 6,262 |   |   | $ | (454 | ) |

|                                           |   | Year Ended December 31, |   |
|------------------------------------------------|--------|------------------------------|--------|
|                                           |   | 2010                         |   |   | 2009 |   |   | 2008 |   |
| Provision (benefit) at statutory rate          |   | $                            | 7,065  |   |   |   | 35.0 | % |   | $ | 5,801 |   |   |   | 35.0 | % |   | $ | (538 | ) |   |   | 35.0 | % |
| State income taxes, net of federal tax benefit |   |                         | 989    |   |   |   | 4.9 |   |   |   | 752 |   |   |   | 4.5 |   |   |   | (127 | ) |   |   | 8.3 |   |
| Permanent differences, net                     |   |                         | (2     | ) |   |   | (0.0 | ) |   |   | (35 | ) |   |   | (0.2 | ) |   |   | 126 |   |   |   | (8.2 | ) |
| Stock based compensation                       |   |                         | 16     |   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |   |   | 71 |   |   |   | (4.7 | ) |
| Other, net                                     |   |                         | (197   | ) |   |   | (1.0 | ) |   |   | (256 | ) |   |   | (1.5 | ) |   |   | 14 |   |   |   | (0.9 | ) |
| Provision (benefit) for income taxes           |   | $                            | 7,871  |   |   |   | 39.0 | % |   | $ | 6,262 |   |   |   | 37.8 | % |   | $ | (454 | ) |   |   | 29.5 | % |

|                                                         |   | December 31, |   |
|--------------------------------------------------------------|--------|-------------------|--------|
|                                                         |   | 2010              |   |   | 2009 |   |
| Pension liability                                            |   | $                 | 14,027 |   |   | $ | 13,208 |   |
| Deferred gain on sale of building                            |   |              | 1,545  |   |   |   | 1,854 |   |
| Accrued expenses                                             |   |              | 3,596  |   |   |   | 3,684 |   |
| Accrued vacation                                             |   |              | 1,174  |   |   |   | 1,386 |   |
| Employee share-based compensation                            |   |              | 521    |   |   |   | 630 |   |
| Net operating loss carry forward, net of federal tax benefit |   |              | -      |   |   |   | 621 |   |
| Receivables reserves                                         |   |              | 207    |   |   |   | 244 |   |
| Other                                                        |   |              | 330    |   |   |   | 257 |   |
| Deferred tax assets                                          |   |              | 21,400 |   |   |   | 21,884 |   |

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|                                     |   | December 31, |    |
|------------------------------------------|--------|-------------------|---------|
|                                     |   | 2010              |    |   | 2009 |   |
| Unbilled receivables                     |   | $                 | (4,106  | ) |   | $  | (9,863 | ) |
| Fixed assets and intangibles             |   |              | (8,957  | ) |   |   | (7,083 | ) |
| Pension funding                          |   |              | (7,408  | ) |   |   | (4,882 | ) |
| Domestic International Sales Corporation |   |              | (2,198  | ) |   |   | (2,183 | ) |
| Other                                    |   |              | (564    | ) |   |   | (667 | ) |
| Deferred tax liability                   |   |              | (23,233 | ) |   |   | (24,678 | ) |
| Deferred tax liability, net              |   | $                 | (1,833  | ) |   | $ | (2,794 | ) |

| 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  |   |
| Reductions for current year tax positions   |   |   | (31  | )      |
| Balance at December 31, 2010                |   | $      | 378  |   |

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|   | • | 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.                                                                                                                                                            |

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|                             |                         |   | Fair Value Measurements    |   |   |    |   |
|----------------------------------|------------------------------|--------|----------------------------|--------|--------|---------|--------|
|                             |                         |   | At December 31, 2010 Using |   |   |    |   |
|                             | Balance Sheet Classification |   | Level 1                    |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Assets:                          |                         |   |                       |   |   |    |   |   |   |   |   |   |   |
| Investments held in Rabbi Trusts | Other noncurrent assets      |   | $                          | 1,589  |   |    | $      | - |   |   | $ | - |   |   | $ | 1,589 |   |
|                             |                         |   |                       |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                     |                         |   |                       |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap               | Other long-term liabilities  |   | $                          | -      |   |    | $      | 467 |   |   | $ | - |   |   | $ | 467 |   |
|                             |                         |   |                       |   |   |    |   |   |   |   |   |   |   |   |   |   |   |

|                             |                         |   | 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 |   |
|                             |                         |   |                       |   |   |    |   |   |   |   |   |   |   |   |   |   |   |

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|                                                      |   | December 31, |   |   | Year Ended December 31, |   |
|-----------------------------------------------------------|--------|--------------|--------|--------|-------------------------|--------|
|                                                      |   | 2010         |   |   | 2009                    |   |   | 2010 |   |   | 2009 |   |
| Other long-term liabilities                               |   | $            | 467    |   |                    | $      | 569 |   |   |   |   |   |   |   |
| Loss recognized in other comprehensive income, net of tax |   |         |   |   |                    |   |   |   |   | $ | 282 |   |   | $ | 343 |   |

|                               |   | Year Ended December 31, |   |
|------------------------------------|--------|------------------------------|--------|
|                               |   | 2010                         |   |   | 2009 |   |   | 2008 |   |
| Interest cost                      |   | $                            | 4,217  |   |   | $ | 4,269 |   |   | $ | 4,103 |   |
| Expected return on plan assets     |   |                         | (4,516 | ) |   |   | (3,857 | ) |   |   | (5,975 | ) |
| Recognized actuarial loss          |   |                         | 1,098  |   |   |   | 1,209 |   |   |   | 586 |   |
| Net periodic pension cost (income) |   | $                            | 799    |   |   | $ | 1,621 |   |   | $ | (1,286 | ) |

|                                           |   | December 31, |    |
|------------------------------------------------|--------|--------------|---------|
|                                           |   | 2010         |    |   | 2009 |   |
| Change in benefit obligation                   |   |         |    |   |   |   |
| Benefit obligation at beginning of year        |   | $            | 75,233  |   |   | $ | 69,691 |   |
| Interest cost                                  |   |         | 4,217   |   |   |   | 4,269 |   |
| Benefits paid                                  |   |         | (3,683  | ) |   |   | (3,450 | ) |
| Actuarial loss                                 |   |         | 4,655   |   |   |   | 4,723 |   |
| Benefit obligation at end of year              |   |         | 80,422  |   |   |   | 75,233 |   |
| Change in plan assets                          |   |         |    |   |   |   |   |   |
| Fair value of plan assets at beginning of year |   |         | 53,727  |   |   |   | 47,121 |   |
| Actual return on plan assets                   |   |         | 6,006   |   |   |   | 10,001 |   |
| Employer contributions                         |   |         | 3,678   |   |   |   | 55 |   |
| Benefits paid                                  |   |         | (3,683  | ) |   |   | (3,450 | ) |
| Fair value of plan assets at end of year       |   |         | 59,728  |   |   |   | 53,727 |   |
| Funded status                                  |   | $            | (20,694 | ) |   | $ | (21,506 | ) |

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|                                       |   | December 31, |   |
|--------------------------------------------|--------|--------------|--------|
|                                       |   | 2010         |   |   | 2009 |   |
| Accrued compensation and employee benefits |   | $            | 4,000  |   |   | $ | 840 |   |
| Other long-term liabilities                |   |         | 16,694 |   |   |   | 20,666 |   |
| Net amount recognized                      |   | $            | 20,694 |   |   | $ | 21,506 |   |

|   |   |      |   |   |         |   |   | Experience   |   |   |         |   |
|--------|--------|-----------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|
|   |   | Beginning |   |   |         |   |   |   Loss/ |   |   |  Ending |   |
|   |   | Balance   |   |   | Amortization |   |   | (Gain)       |   |   | Balance      |   |
| 2010   |   | $         | 33,312 |   |         | $      | (1,098 | )            |   | $      | 3,165        |   |   | $ | 35,379 |   |
| 2009   |   | $         | 35,942 |   |         | $      | (1,209 | )            |   | $      | (1,421       | )      |   | $ | 33,312 |   |
| 2008   |   | $         | 11,260 |   |         | $      | (635   | )            |   | $      | 25,317       |   |   | $ | 35,942 |   |

|                                  |   | December 31, |   |
|---------------------------------------|--------|--------------|--------|
|                                  |   | 2010         |   |   | 2009 |   |
| Used to determine benefit obligations |   |         |   |   |   |   |
| Discount rate                         |   |         | 5.25   | % |   |   | 5.75 | % |
| Rate of compensation increase         |   |         | N/A    |   |   |   | N/A |   |

|                                         |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Used to determine net periodic benefit costs |   |   |   |   |   |   |   |   |   |
| Discount rate                                |   |   | 5.75   | %      |   |   | 6.25   | %      |   |   | 6.25 | % |
| Expected rate of return on assets            |   |   | 8.50   | %      |   |   | 8.50   | %      |   |   | 9.00 | % |
| Rate of compensation increase                |   |   | N/A    |   |   |   | N/A    |   |   |   | N/A |   |

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|                        |   |   |   |   | Fair Value Measurement at December 31, 2010          |   |
|-----------------------------|--------|--------|--------|--------|------------------------------------------------------|--------|
|                        |   |   |   |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant Other Observable Inputs |   |   | Significant Unobservable Inputs |   |
| Asset Category              |   | Total  |   |   | (Level 1)                                            |   |   | (Level 2) |   |   | (Level 3) |   |
| Cash                        |   | $      | 414    |   |                                                 | $      | 414 |   |   | $ | - |   |   | $ | - |   |
| Money market funds          |   |   | 4,227  |   |                                                 |   | - |   |   |   | 4,227 |   |   |   | - |   |
| Equity securities:          |   |   |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Common equity securities    |   |   | 11,183 |   |                                                 |   | 7,505 |   |   |   | 3,678 |   |   |   | - |   |
| Preferred equity securities |   |   | 142    |   |                                                 |   | 142 |   |   |   | - |   |   |   | - |   |
| Equity mutual funds         |   |   | 21,593 |   |                                                 |   | 21,593 |   |   |   | - |   |   |   | - |   |
| Fixed income securities:    |   |   |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury obligations   |   |   | 7,046  |   |                                                 |   | - |   |   |   | 7,046 |   |   |   | - |   |
| U.S. Government agencies    |   |   | 1,278  |   |                                                 |   | - |   |   |   | 1,278 |   |   |   | - |   |
| Corporate and foreign bonds |   |   | 9,626  |   |                                                 |   | - |   |   |   | 9,626 |   |   |   | - |   |
| Other type of investments:  |   |   |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Managed futures             |   |   | 2,024  |   |                                                 |   | - |   |   |   | - |   |   |   | 2,024 |   |
| Hedge fund                  |   |   | 2,195  |   |                                                 |   | - |   |   |   | - |   |   |   | 2,195 |   |
| Total                       |   | $      | 59,728 |   |                                                 | $      | 29,654 |   |   | $ | 25,855 |   |   | $ | 4,219 |   |

|                                                |   | Fair Value Measurement Using Significant Unobservable Inputs (Level 3) |   |
|-----------------------------------------------------|--------|------------------------------------------------------------------------|--------|
|                                                |   | Managed Futures                                                        |   |   | HedgeFund |   |   | Total |   |
| Beginning balance at December 31, 2009              |   | $                                                                      | 2,000  |   |   | $ | 1,000 |   |   | $ | 3,000 |   |
| Unrealized gains on plan assets:                    |   |                                                                   |   |   |   |   |   |   |   |   |   |   |
| Relating to assets still held at the reporting date |   |                                                                   | 24     |   |   |   | 195 |   |   |   | 219 |   |
| Relating to assets sold during the period           |   |                                                                   | -      |   |   |   | - |   |   |   | - |   |
| Purchases                                           |   |                                                                   | -      |   |   |   | 1,000 |   |   |   | 1,000 |   |
| Transfers in and/or out of Level 3                  |   |                                                                   | -      |   |   |   | - |   |   |   | - |   |
| Ending balance at December 31, 2010                 |   | $                                                                      | 2,024  |   |   | $ | 2,195 |   |   | $ | 4,219 |   |

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| Year ending December 31:                                   |   |   |   |
|------------------------------------------------------------|--------|--------|--------|
| 2011                                                       |   | $      | 3,915  |   |
| 2012                                                       |   | $      | 4,188  |   |
| 2013                                                       |   | $      | 4,458  |   |
| 2014                                                       |   | $      | 4,605  |   |
| 2015                                                       |   | $      | 4,821  |   |
| Five subsequent fiscal years ending December 31, 2020 |   | $      | 26,314 |   |

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|                                   |   | Year ended December 31, |   |
|----------------------------------------|--------|-------------------------|--------|
|                                   |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| Cost of products and services          |   | $                       | 324    |   |   | $ | 319 |   |   | $ | 483 |   |
| Selling, general and administrative    |   |                    | 394    |   |   |   | 417 |   |   |   | 665 |   |
| Total share-based compensation expense |   | $                       | 718    |   |   | $ | 736 |   |   | $ | 1,148 |   |

|                                             |   |      |     |   |     |   |   | Weighted    |   |   |      |   |
|--------------------------------------------------|--------|-----------|----------|--------|----------|--------|--------|-------------|--------|--------|-----------|--------|
|                                             |   |      |     |   |     |   |   | Average     |   |   |      |   |
|                                             |   |      |     |   | Weighted |   |   | Remaining   |   |   |      |   |
|                                             |   |      |     |   | Average  |   |   | Contractual |   |   | Aggregate |   |
|                                             |   | Number of |     |   | Exercise |   |   | Term        |   |   | Intrinsic |   |
|                                             |   | Shares    |     |   | Price    |   |   | (in years)  |   |   | Value     |   |
| Outstanding and exercisable at December 31, 2009 |   |      | 606,843  |   |     | $      | 9.62   |        |   | 1.5    |      |   | $ | 981 |   |
| Granted                                          |   |      | 40,000   |   |     | $      | 13.36  |        |   |   |      |   |   |   |   |
| Exercised                                        |   |      | (161,484 | )      |     | $      | 8.52   |        |   |   |      |   |   |   |   |
| Cancelled                                        |   |      | (12,869  | )      |     | $      | 12.76  |        |   |   |      |   |   |   |   |
| Outstanding at December 31, 2010                 |   |      | 472,490  |   |     | $      | 10.23  |        |   | 1.5    |      |   | $ | 1,688 |   |
| Exercisable at December 31, 2010                 |   |      | 432,490  |   |     | $      | 9.94   |        |   | 0.7    |      |   | $ | 1,684 |   |

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|                                                      |   | Year Ended December 31, |   |
|-----------------------------------------------------------|--------|-------------------------|--------|
|                                                      |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
| Amounts realized or received from stock option exercises: |   |                    |   |   |   |   |   |   |   |
| Cash proceeds received                                    |   | $                       | 1,108  |   |   | $ | 631 |   |   | $ | 449 |   |
| Intrinsic value realized                                  |   | $                       | 598    |   |   | $ | 1,972 |   |   | $ | 267 |   |
| Income tax benefit realized                               |   | $                       | 166    |   |   | $ | 84 |   |   | $ | 101 |   |

|                           |   |     |    |   | Weighted   |   |
|--------------------------------|--------|----------|---------|--------|------------|--------|
|                           |   |     |    |   | Average    |   |
|                           |   | Number   |    |   | Grant-     |   |
|                           |   |  of |    |   |  Date |   |
|                           |   | Shares   |    |   | Fair Value |   |
| Nonvested at December 31, 2009 |   |     | 165,701 |   |       | $      | 9.39 |   |
| Granted                        |   |     | 30,300  |   |       | $      | 10.99 |   |
| Vested                         |   |     | (73,711 | )      |       | $      | 9.77 |   |
| Cancelled                      |   |     | (23,535 | )      |       | $      | 9.48 |   |
| Nonvested at December 31, 2010 |   |     | 98,755  |   |       | $      | 9.57 |   |

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|                                                                      |   | Before |    |   | Tax       |   |   | Net of |   |
|---------------------------------------------------------------------------|--------|--------|---------|--------|-----------|--------|--------|--------|--------|
|                                                                      |   | Tax    |    |   | (Expense) |   |   | Tax    |   |
|                                                                      |   | Amount |    |   | Benefit   |   |   | Amount |   |
| 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, 2010                                              |   |   |    |   |      |   |   |   |   |   |   |   |
| Pension liability adjustment                                              |   | $      | (3,164  | )      |      | $      | 1,254  |   |   | $ | (1,910 | ) |
| Less: reclassification adjustment for costs realized in net income        |   |   | 1,098   |   |      |   | (435   | )      |   |   | 663 |   |
| Net pension liability adjustment                                          |   |   | (2,066  | )      |      |   | 819    |   |   |   | (1,247 | ) |
| Unrealized holding losses on derivative instruments                       |   |   | (344    | )      |      |   | 136    |   |   |   | (208 | ) |
| Less: reclassification adjustment for costs realized in net income        |   |   | 446     |   |      |   | (177   | )      |   |   | 269 |   |
| Net unrealized holding gain on derivative instruments                     |   |   | 102     |   |      |   | (41    | )      |   |   | 61 |   |
| Other comprehensive loss                                                  |   | $      | (1,964  | )      |      | $      | 778    |   |   | $ | (1,186 | ) |

|                                                               |   | Year Ended December 31, |       |
|--------------------------------------------------------------------|--------|------------------------------|------------|
|                                                               |   | 2010                         |       |   | 2009 |   |   | 2008 |   |
|  Weighted average shares outstanding - Basic                  |   |                         | 9,893,322  |   |   |   | 9,551,614 |   |   |   | 9,493,495 |   |
|  Dilutive effect of stock options and restricted stock grants |   |                         | 185,615    |   |   |   | 221,108 |   |   |   | - |   |
|  Weighted average shares outstanding - Diluted                |   |                         | 10,078,937 |   |   |   | 9,772,722 |   |   |   | 9,493,495 |   |

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|                     |   | Lease      |   |   | Sublease |   |
|--------------------------|--------|------------|--------|--------|----------|--------|
|                     |   | Commitment |   |   | Receipts |   |
| Year ending December 31: |   |       |   |   |     |   |
| 2011                     |   | $          | 6,645  |   |     | $      | 2,313 |   |
| 2012                     |   |       | 6,463  |   |     |   | 1,732 |   |
| 2013                     |   |       | 6,215  |   |     |   | 1,732 |   |
| 2014                     |   |       | 6,094  |   |     |   | 1,732 |   |
| 2015                     |   |       | 5,615  |   |     |   | 1,732 |   |
| 2016 and thereafter      |   |       | 7,046  |   |     |   | - |   |
|                     |   | $          | 38,078 |   |     | $      | 9,241 |   |

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|                                  |   | First   |   |   | Second  |   |   | Third   |   |   | Fourth  |   |   | Fiscal |   |
|--------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
|                                       |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Year   |   |
| 2010                                       |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Revenue                                    |   | $       | 68,584 |   |    | $      | 65,308 |    |   | $      | 68,420  |   |   | $      | 69,753 |   |   | $ | 272,065 |   |
| Gross profit                               |   | $       | 10,757 |   |    | $      | 10,197 |    |   | $      | 10,790  |   |   | $      | 12,146 |   |   | $ | 43,890 |   |
| Operating income                           |   | $       | 4,416  |   |    | $      | 4,731  |    |   | $      | 5,208   |   |   | $      | 6,460  |   |   | $ | 20,815 |   |
| Income from continuing operations          |   | $       | 2,737  |   |    | $      | 2,579  |    |   | $      | 3,006   |   |   | $      | 3,991  |   |   | $ | 12,313 |   |
| Income from discontinued operations        |   |    | 132    |   |    |   | 173    |    |   |   | 87      |   |   |   | -      |   |   |   | 392 |   |
| Net income                                 |   | $       | 2,869  |   |    | $      | 2,752  |    |   | $      | 3,093   |   |   | $      | 3,991  |   |   | $ | 12,705 |   |
| Earnings per share:(1)                     |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic                                      |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income from continuing operations          |   | $       | 0.28   |   |    | $      | 0.26   |    |   | $      | 0.30    |   |   | $      | 0.40   |   |   | $ | 1.24 |   |
| Income from discontinued operations        |   |    | 0.01   |   |    |   | 0.02   |    |   |   | 0.01    |   |   |   | -      |   |   |   | 0.04 |   |
| Net income                                 |   | $       | 0.29   |   |    | $      | 0.28   |    |   | $      | 0.31    |   |   | $      | 0.40   |   |   | $ | 1.28 |   |
| Diluted                                    |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income from continuing operations          |   | $       | 0.27   |   |    | $      | 0.26   |    |   | $      | 0.30    |   |   | $      | 0.39   |   |   | $ | 1.22 |   |
| Income from discontinued operations        |   |    | 0.01   |   |    |   | 0.02   |    |   |   | 0.01    |   |   |   | -      |   |   |   | 0.04 |   |
| Net income                                 |   | $       | 0.29   |   |    | $      | 0.27   |    |   | $      | 0.31    |   |   | $      | 0.39   |   |   | $ | 1.26 |   |
|                                       |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| 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:(1)                     |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| 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 |   |

| (1) | 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.  The components of basic and diluted earnings per share are also computed independently for each quarter presented; accordingly amounts may not add due to rounding. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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DYNAMICS RESEARCH CORPORATION

|                            |   |       |   |   | 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,    |   |       |   |   |       |   |   |       |   |   |       |   |   |   |   |
| 2010                            |   | $          | 583    |   |       | $      | 388    |       |   | $      | -          |   |   | $ | (450 | ) |   | $ | 521 |   |
| 2009                            |   | $          | 910    |   |       | $      | 124    |       |   | $      | -          |   |   | $ | (451 | ) |   | $ | 583 |   |
| 2008                            |   | $          | 873    |   |       | $      | 249    |       |   | $      | -          |   |   | $ | (212 | ) |   | $ | 910 |   |

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

ITEM 9A. CONTROLS AND PROCEDURES

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ITEM 9B. OTHER INFORMATION

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

| Name                           |   | Executive Office Held                                                                 |   | Age    |
|--------------------------------|--------|---------------------------------------------------------------------------------------|--------|--------|
| James P. Regan                 |   | President, Chairman and Chief Executive Officer                                       |   | 70     |
|                           |   |                                                                                  |   |   |
| Richard A. Covel               |   | Vice President, General Counsel and Secretary                                         |   | 64     |
|                           |   |                                                                                  |   |   |
| David Keleher                  |   | Senior Vice President and Chief Financial Officer                                     |   | 61     |
|                           |   |                                                                                  |   |   |
| Steven P. Wentzell             |   | Senior Vice President and General Manager,Human Resources                             |   | 64     |
|                           |   |                                                                                  |   |   |
| Lawrence H. O’Brien, Jr. |   | Senior Vice President and General Manager,Business Solutions and Business Development |   | 59     |

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ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR 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: February 28, 2011 | /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)                    |   | February 28, 2011 |
|--------------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|-------------------|
| James P. Regan                       |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ David Keleher                    |   | Senior Vice President and Chief Financial Officer (Principal Financial Officer)                  |   | February 28, 2011 |
| David Keleher                        |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ Shaun McCarthy                   |   | Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) |   | February 28, 2011 |
| Shaun McCarthy                       |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ John S. Anderegg, Jr.       |   | Director                                                                                         |   | February 28, 2011 |
| John S. Anderegg, Jr.           |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ Francis J. Aguilar               |   | Director                                                                                         |   | February 28, 2011 |
| Francis J. Aguilar                   |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ Gen. George T. Babbitt, Jr. |   | Director                                                                                         |   | February 28, 2011 |
| Gen. George T. Babbitt, Jr.     |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ Lt. Gen. Charles P. McCausland   |   | Director                                                                                         |   | February 28, 2011 |
| Lt. Gen. Charles P. McCausland       |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ Nickolas Stavropoulos            |   | Director                                                                                         |   | February 28, 2011 |
| Nickolas Stavropoulos                |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ Richard G. Tennant               |   | Director                                                                                         |   | February 28, 2011 |
| Richard G. Tennant                   |   |                                                                                             |
|                                 |   |                                                                                             |   |              |
| /s/ W. Scott Thompson                |   | Director                                                                                         |   | February 28, 2011 |
| W. Scott Thompson                    |   |                                                                                             |

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|        |   |                                                                                                                                                                                    |   | 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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|        |   |                                                                                                                    |   | 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 Incentive Plan.                                                        |   |     |   | 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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|        |   |                                                                                                                                                                                                                                                                                                                                           |   | 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 Incentive Plan.                                                                                                                                                                                                                                                                              |   |     |   | 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 ended dates. |

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