Dynamics Research


(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

The Annual Meeting of the stockholders of Dynamics Research Corporation will be held at 2:00 p.m. on May 13, 2004 at the offices of Nixon Peabody LLP, 100 Summer Street, Boston, Massachusetts 02110, for the following purposes:


	1.	To fix the number of directors for the ensuing year and to elect the Class II Directors.

	2.	To consider and act upon such other matters as may properly come before the meeting.

Only stockholders of record at the close of business on March 22, 2004 will be entitled to receive notice of and to vote at the meeting.

The accompanying proxy is solicited by the Board of Directors of Dynamics Research Corporation (the “company”) to be voted at the 2004 Annual Meeting of Stockholders to be held on May 13, 2004.

Shares represented by proxies in the accompanying form, if properly executed and returned and not revoked, will be voted at the Annual Meeting. To be voted, proxies must be filed with the Clerk prior to voting. The authority granted by an executed proxy may be revoked at any time before it is exercised by filing with the Clerk of the company a written revocation or a duly executed proxy bearing a later date or by voting in person at the Annual Meeting. Proxies will be voted as specified by the stockholders. If no specification is made, the proxy will be voted for the election of the Class II directors.

Stockholders of record at the close of business on March 22, 2004 are entitled to notice of and to vote at the Annual Meeting. There were 8,337,703 shares of common stock, $0.10 par value per share, outstanding as of that date, each entitled to one vote.

This proxy statement and the enclosed proxy are being mailed to stockholders on or about the date of the Notice of Annual Meeting.

The cost of solicitation of proxies will be borne by the company. Employees of the company may also solicit proxies by mail, telephone or personal interview.

Consistent with state law and under the company’s by-laws, a majority of the shares entitled to be cast on a particular matter, present in person or represented by proxy, constitutes a quorum as to such matter. Persons appointed by the company to act as election inspectors for the meeting will count votes cast by proxy or in person at the Annual Meeting.

If a quorum is present, the nominees for election as Class II directors at the Annual Meeting shall be elected by a plurality of the votes properly cast for the election of directors at the Annual Meeting.

The election inspectors will count shares represented by proxies that withhold authority to vote for either proposal or that reflect abstentions and “broker non-votes” (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners and (ii) the broker or nominee does not have the discretionary authority to vote on a particular matter) only as shares that are present and entitled

The following table shows the beneficial ownership of the common stock of the company as of March 22, 2004 by (i) persons or groups known to the company to be the beneficial owner of more than 5% of its outstanding common stock, based on filings with the Securities and Exchange Commission, (ii) each director and each executive officer listed in the Summary Compensation Table below and (iii) all directors and executive officers as a group. Except as otherwise indicated, the beneficial owners listed below have sole investment and voting power with respect to their shares.


*	Less than 1% of the outstanding shares of common stock.

(1)	Unless otherwise indicated, the address of each beneficial owner is c/o Dynamics Research Corporation, 60 Frontage Road, Andover, MA 01810.
(2)	Includes options to acquire shares which are currently exercisable or exercisable within 60 days of March 22, 2004: Mr. Regan, 255,350 shares; Dr. Aguilar, 16,414 shares; Mr. Kames, 24,200 shares; General Mullins, 27,320 shares; Mr. Hoover, 33,333 shares; Mr. Covel, 20,000 shares; Mr. Keleher, 30,000; Mr. Wilkinson, 13,920 shares.
(3)	Includes 58,300 shares held by Mr. Anderegg as custodian for his children, 84,902 shares held in the estate of his deceased spouse, of which Mr. Anderegg is executor, and 8,720 shares held by his current spouse, as to all of which he disclaims beneficial ownership.


(4)	Includes 11,659 shares held in a pension plan over which Dr. Aguilar has sole voting and investment power.
(5)	Fidelity Management & Research Co., (“Fidelity”), a registered investment advisor, is deemed to have beneficial ownership of 1,204,007 shares, all of which shares are owned by investment companies and their investment vehicles for which Fidelity serves as investment advisor and investment manager. Fidelity disclaims beneficial ownership of all such shares.
(6)	Kennedy Capital Management, Inc. (“Kennedy”), a registered investment advisor, is deemed to have beneficial ownership of 1,182,006 shares, all of which shares are owned by investment companies and their investment vehicles for which Kennedy serves as investment advisor and investment manager. Kennedy disclaims beneficial ownership of all such shares.

William C. Hoover, who assumed the role of our President and Chief Operating Officer in April 2003, provided consulting services to us in 2002 relating to our acquisition of Andrulis, for which we paid his company $35,290 in 2003. Mr. Hoover’s consulting company also provided services to us in the first quarter of 2003, relating to business development assessment, for which we paid his company $27,330.

The Board of Directors of the company is classified into three classes, as nearly equal in number as possible, having staggered terms of three years each with the term of office of one class expiring each year. The enclosed proxy will be voted to fix the number of directors at six and to elect the persons named below, unless otherwise instructed, as Class II directors for a term of three years expiring at the 2007 Annual Meeting of Stockholders, or until their respective successors are elected and qualified. If the nominees should become unavailable, proxies will be voted for a substitute nominee designated by the Board of Directors or to fix the number of directors at a lesser number, unless instructions are given to the contrary. The Board has no reason to expect that the nominees will become unavailable to serve.

The Board of Directors recommends a vote “FOR” the election of Francis J. Aguilar and John S. Anderegg, Jr.

The principal occupation of the above nominees and continuing directors is that set forth above for the past five years.

Dr. Aguilar is a director and chairman of the Compensation Committee of Bowater, Inc. and a trustee of Bentley College. Mr. Kames was a director of LAU Defense Systems, LLC until October 31, 2003 and of Boston Rheology, LLC until November 13, 2003. Lieutenant General McCausland is member of the advisory board, Franklin Program in Transportation and Distribution Management, Syracuse University. He is a

The Board of Directors is comprised of six members, a majority of whom qualifies as independent under the current listing standards of the Nasdaq National Market. Specifically, the board has determined that Dr. Aguilar, Mr. Kames, Lt. Gen. McCausland and Gen. Mullins are independent, as that term is defined by the listing standards of the Nasdaq National Market. The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The Board of Directors held seven meetings during 2003. In 2003, each of the directors attended at least 75% of the total number of meetings of the Board of Directors, except that Mr. Kames attended 71% of the total number of meetings of the Board of Directors. All directors attended at least 75% of the meetings of the Committees on which they serve.

Audit Committee. The Audit Committee, comprised solely of independent directors, is responsible for the oversight of our accounting and financial reporting processes and the audits of our financial statements. In discharging its duties, the Audit Committee reviews with the independent auditors and management the financial statements and reports issued by the company, reviews the company’s internal accounting procedures, controls and programs, reviews any transactions that involve a potential conflict of interest, reviews the scope of independent audit coverage and the fees charged by the independent accountants and reviews the independence of such accountants from our management. The Audit Committee also is responsible for selecting and engaging the company’s independent auditors. The Audit Committee operates under a written charter, which was initially adopted by the Board of Directors on April 25, 2000 and amended by the Board of Directors on December 10, 2002, March 28, 2003 and most recently December 10, 2003. A copy of the Audit Committee Charter, as amended, is attached to this proxy statement as Annex A. The current members of the Audit Committee are Mr. Kames, Lt. Gen. McCausland and Gen. Mullins. The Board of Directors has determined that each Audit Committee member has sufficient knowledge in financial and accounting matters to serve on the Committee. The Board has also designated Mr. Kames, the Audit Committee Chairman, as the “audit committee financial expert,” as defined under Item 401(h)(2) of Regulation S-K, adopted in accordance with Section 407 of the Sarbanes-Oxley Act of 2002. The Audit Committee held 15 meetings during 2003.

Compensation Committee. The Compensation Committee is responsible for determining the compensation for the Chief Executive Officer and the company’s other executive officers and for administering the company’s various stock option and other incentive plans and determining distributions and granting awards under such plans at the Executive level. The Chief Executive Officer determines distributions and grants awards under such plans at the non-Executive level. The current members of the Compensation Committee are Dr. Aguilar, Chairman, and General Mullins, both of whom satisfy the independence requirements of the current listing standards of the Nasdaq National Market.

Nominating and Governance Committee. The Nominating and Governance Committee recommends to the Board of Directors nominees for the Board of Directors as well as for the Board committees, reports annually to the Board on succession planning, leads the Board in its annual review of the Board’s performance and recommends to the Board on an ongoing basis the corporate governance guidelines applicable to the company. The Nominating and Governance Committee was appointed by the Board of Directors and held two meetings in 2003. The Board of Directors discussed governance matters at each of its seven meetings in 2003. The Nominating and Governance Committee operates under a written charter, which was initially adopted by the Board of Directors on December 10, 2002 and amended on December 10, 2003. A copy of the Nominating

The Nominating and Governance Committee shall consider and evaluate equally candidates proposed by shareholders, non-management directors, the chief executive officer, other executive officers, third-party search firms or other sources and shall conduct appropriate inquiries into the backgrounds and qualifications of such candidates. Although the Nominating and Governance Committee currently identifies candidates primarily through word of mouth and networking, more formal procedures will be established. Shareholders may recommend individuals to the Nominating and Governance Committee for consideration as potential director candidates by submitting the names and backgrounds of the proposed candidates to Dr. Francis Aguilar, chair of the Nominating and Governance Committee, in care of Richard A. Covel, Dynamics Research Corporation, 60 Frontage Road, Andover, Massachusetts 01810-5498. The Nominating and Governance Committee shall consider such recommendations only if appropriate biographical information and background material is provided.

To be recommended by the Nominating and Governance Committee for a position on the company’s board of directors, a candidate must, at a minimum, have high standards of personal and professional ethics; integrity and values; substantial experience at the policy making level in business, government, or education; expertise that is complementary to the experience of other Board members; a willingness and ability to devote the required amount of time to fulfill diligently the duties and responsibilities of Board membership; and a desire to represent the balanced best interests of the stockholders as a whole. In addition, the Nominating and Governance Committee believes that one or more of the company’s directors should have expertise or experience as a military officer or a senior civil service executive; as a senior corporate manager or operating officer; and as a public company financial or accounting officer.

Shareholders of the company may communicate directly with our Board of Directors by submitting to Richard A. Covel at the company’s address listed above, in writing, any such communications. Mr. Covel shall be primarily responsible for monitoring the communications and providing summaries or copies of such communications to the full Board of Directors as he deems appropriate; in general, communications relating to corporate governance and long-term corporate strategy will be submitted to the full board whereas communications relating to ordinary business affairs, personal grievances and the like may be dealt with by Mr. Covel.

Directors who are not employees of the company receive an annual fee of $25,000. The Committee Chairman for the Audit, Governance and Compensation Committees receive an annual stipend of $5,000, $2,500 and $2,500 respectively. In addition, outside Directors receive $1,500 for each day the full Board meets in excess of the five regularly scheduled meetings.

The company has a deferred compensation plan under which non-employee directors may elect to defer their directors’ fees. Amounts deferred for each participant are credited to a separate account, and interest at the lowest rate at which the company borrowed money during each quarter or, if there was no such borrowing, at the prime rate, is credited to such account quarterly. The balance in a participant’s account is payable in a

Under the 1995 Stock Option Plan for Non-Employee Directors, each director who is not an employee of the company is granted an initial grant of an option to purchase 5,000 shares of common stock and an annual grant of an option to purchase 1,000 shares, each at an exercise price equal to the fair market value on the date of grant. All options granted under this plan become exercisable in three equal installments on each of the first, second and third anniversaries of the date of grant. In 2003, the non-employee directors entitled to grants under this plan consented to forego their rights to such grants and accordingly, no shares were granted under this plan in either 2002 or 2003.

The 2000 Incentive Plan allows the company to grant incentive stock options, non-qualified stock options, stock appreciation rights, awards of nontransferable shares of restricted common stock and deferred grants of common stock up to a total of 1.5 million shares to directors or key employees of the company. In the case of incentive stock options, the option price may not be less than the fair market value of the stock at the date of grant. The option period may not exceed 10 years from the date of grant.

The 2003 Incentive Plan allows the company to grant incentive stock options, non-qualified stock options, stock appreciation rights, awards of nontransferable shares of restricted common stock and deferred grants of common stock up to a total of 400 thousand shares to directors or key employees of the company. In the case of incentive stock options, the option price may not be less than the fair market value of the stock at the date of grant. The option period may not exceed 10 years from the date of grant.

The following table summarizes the compensation earned by the Chairman and Chief Executive Officer and four of the company’s other most highly paid executive officers who earned salary and bonus in excess of $100,000 for the year ended December 31, 2003 (the “named executive officers”) for services rendered during 2003, 2002 and 2001.


(1)	Mr. Hoover was hired on April 7, 2003.
(2)	Consists of employer’s 401(k) plan contributions and, for Mr. Regan, $3,002 of the $13,002 total represents the company’s expense for special life insurance coverage.
(3)	Amounts for 2003 are calculated based upon 12,000, 6,000, 1,800, and 6,000 shares of restricted stock granted each of Messrs. Regan, Hoover, Covel and Keleher respectively, on March 1, 2004, based on the reported last sale price per share of the company’s common stock on that date of $18.10, as reported by the Nasdaq National Market.
(4)	Amounts for 2002 are calculated based upon 6,000, 2,000, 3,000 and 1,000 shares of restricted stock granted each of Messrs. Regan, Covel, Keleher and Wilkinson, respectively, on February 19, 2003, based on the reported last sale price per share of the company’s common stock on that date of $9.95, as reported by the Nasdaq National Market.
(5)	Amounts for 2001 are calculated based upon 25,000, 10,000, 15,000 and 7,000 shares of restricted stock granted each of Messrs. Regan, Covel, Keleher and Wilkinson, respectively, on May 31, 2001, based on the reported last sale price per share of the company’s common stock on that date of $8.94, as reported by the Nasdaq National Market.


(6)	The following table provides additional information on the restricted share holdings of Messrs. Regan, Hoover, Covel, Keleher and Wilkinson as of 12/31/03.


(1)	Executive officer did not receive any option grants or SAR awards during fiscal 2003.
(2)	Options vest over three years, with one-third of the options vesting one year from the date of grant, one-third vesting two years from the date of grant and one-third vesting three years from the date of grant.
(3)	Options were granted at an exercise price equal to the reported last sale price of our common stock on the date of grant, as reported by the Nasdaq National Market.
(4)	The potential realizable value is calculated based on the term of the stock option at the time of grant. The potential realizable values at 5% and 10% appreciation are calculated by assuming that the exercise price at the date of grant appreciates at the indicated rate for the entire term of the stock option and that the stock option is exercised at the exercise price and sold on the last day of its term at the appreciated price. Stock price appreciation of 5% and 10% is assumed pursuant to rules promulgated by the SEC and does not represent our prediction of our stock price performance. Actual gains, if any, on stock option exercises are dependent on the future performance of the common stock, the timing of such exercises and the option holder’s continued employment through the vesting period. The amounts reflected in this table may not accurately reflect or predict the actual value of the stock options.

The following table presents the value of unexercised options held by the named executive officers on December 31, 2003.


(1)	Based on last sale price of $16.13 per share of the company’s common stock as reported by Nasdaq less respective exercise prices.

In February 2002, the Board of Directors approved specific retirement program changes that limit future increases in benefits under the company’s defined benefit Pension Plan, froze membership in the Plan and provided for improvements to the company’s 401(k) Plan. Actual changes to the company’s defined benefit Pension Plan and 401(k) Plan were effective July 1, 2002.

The following table sets forth the annual benefits payable as a life annuity which would be payable under the company’s noncontributory defined benefit Pension Plan at normal retirement at age 65 to participants having the years of service and average annual earnings as indicated in the table, assuming all such participants attained age 65 in 2003:

As of March 22, 2004, Messrs. Wilkinson, Regan, Keleher and Covel had 21, 2, 2 and 1 years of service, respectively, for purposes of the Pension Plan.

All employees of the company, including the individuals named in the compensation table above, who completed a year of service prior to July 1, 2002, have earned a benefit under the Pension Plan. On July 1, 2002, the company calculated the accrued pension benefit for all eligible participants. This benefit was calculated using an employee’s final average pay and years of service. The amount of annual retirement benefit as of June 30, 2002, was determined by a formula which multiplied years of service by the product of .683% of the average of the participant’s five highest consecutive years of compensation in the last ten years worked (or actual number of years, if less than 5 years) plus .65% of such average annual earnings which exceed Social Security covered compensation, but not less than (a) $60 multiplied by his or her years of service or (b) the benefit which had accrued as of December 31, 1987 under the company’s prior retirement program. The benefits listed in the Pension Plan Table include an offset for Social Security. This accrued benefit will increase by 3% each year while an employee is working at the company. The 3% increase will be applied on the last business day of each year beginning in 2003. Employees must be actively employed on the last day of the year to receive this increase.

The company has an employment agreement with Mr. Regan providing for his full-time employment as president, chief executive officer and a director at an initial base salary of $300,000 per year. Mr. Regan is eligible for an annual incentive bonus of up to 75% of his base salary. The agreement precludes Mr. Regan from competing with the company for one year after the cessation of his employment. The agreement may be terminated by either party on six month’s notice. If Mr. Regan’s employment is terminated by the company other than for cause or by Mr. Regan with good reason (unless he is covered by the change of control agreement described below), the company will continue to pay Mr. Regan’s base salary and to provide his health and life insurance for twelve months, and all of his options will vest and remain exercisable for one year.

The company’s change of control agreement with Mr. Regan provides him with benefits if his employment with the company is terminated, other than for cause or his disability or death, or if he resigns for good reason within 24 months of any change of control of the company. Upon such a termination, (i) the company will pay Mr. Regan an amount equal to two times his annual base salary at the rate in effect immediately prior to the date of termination or immediately prior to the change of control, whichever is higher, plus his target bonus compensation for the fiscal year during which the termination of employment occurs or in effect immediately prior to the change of control, whichever is higher; (ii) any stock, stock option or other awards will immediately vest and remain exercisable for the lesser of four years or their original term; and (iii) the company will continue to insure Mr. Regan and his dependents in the company’s life and medical insurance plans for up to two years after termination or the date Mr. Regan is eligible to receive substantially equivalent life and medical benefits under another employer-provided plan. If any payment or benefit provided by the company under the agreement will be subject to an excise tax under Section 4999 of the Internal Revenue Code, the company will provide Mr. Regan with a payment to cover such tax.

Pursuant to the DRC Special Severance Plan, Messrs. Hoover, Keleher, Covel, and Wilkinson would each be provided with benefits if their employment with the company is terminated, other than for cause or their disability or death, or if they resign for good reason within 24 months of any change of control of the company. Upon such a termination, (i) the company will pay Mr. Hoover and Mr. Keleher eighteen months, and Mr. Covel and Mr. Wilkinson twelve months of their current annual base salary at the rate in effect immediately prior to the date of termination or immediately prior to the change of control, whichever is

higher, plus their target bonus compensation for the fiscal year during which the termination of employment occurs or in effect immediately prior to the change of control, whichever is higher; and (ii) the company will continue to provide the company’s life and medical insurance plans or similar coverage for the same term as their severance pay term after termination or until the date they become eligible to receive substantially equivalent life and medical benefits under another employer-provided plan. The change of control agreements terminate on January 1, 2007 or on the second anniversary of a change of control.

The Compensation Committee of the Board of Directors administers the company’s executive management compensation program. The committee is responsible for determining the compensation and benefits for the chief executive officer and the company’s other executive officers and for reviewing the design and effectiveness of executive compensation policies. The committee is also responsible for administering and for determining distributions and granting awards under the company’s various stock option and other incentive plans. The committee currently comprises Dr. Francis J. Aguilar and General James P. Mullins. Dr. Aguilar and General Mullins are each independent non-employee directors, and there are no interlocking relationships as defined by the Securities and Exchange Commission. The committee operates under a written charter, adopted December 2002 and amended December of 2003, and meets formally and consults informally during the year.

The company’s executive compensation program consists of base salary, annual cash incentives and long-term incentives comprising stock options and restricted stock. The program’s objectives are fourfold:


	•	Provide base and variable compensations that enable the company to attract and retain key executives.
	•	Provide executive officers with total direct remuneration that is competitive with similarly sized companies of comparable performance.
	•	Reward executives for outstanding achievements that benefit the company.
	•	Align the interests of the company’s executives with the long-term interests of shareholders.

The executive compensation program provides an over-all level of compensation opportunity that the Compensation Committee believes to be competitive with other companies of comparable size and scope. Actual compensation will vary with annual and long-term company performance, as well as individual performance and longevity; hence, it may be greater or less than actual compensation at other companies. The committee uses its discretion to define and recommend to the Board of Directors executive compensation at levels that, in its judgment, are warranted by external or internal factors as well as an executive’s individual circumstances. In arriving at what it considers appropriate levels and components of compensation, the Compensation Committee utilizes industry compensation data provided by nationally recognized information sources.

The particular elements of the compensation program are discussed more fully below.

Base Salary. The committee maintains executive base salary levels that are competitive with other companies of comparable size and scope in similar industries.


	•	Potential impact of the individual on the company and its performance.
	•	Salaries paid by other companies for equivalent positions in similar industries.
	•	Individual performance against pre-determined goals established by the committee.
	•	Overall performance of the company.

Annual Cash Incentives. The Compensation Committee may recommend cash incentives as a means of rewarding executives for significant company and individual performance. The cash incentive is designed to encourage and reward performance over and above any merit increase received and, to the extent warranted by performance, maintain employee total compensation in line with internal and external peer groups. The principal vehicle for executive cash bonuses is the Executive Incentive Plan (EIP). The EIP provides for year-end incentive payments that are tied to measures assessing and reflecting performance of the corporation, the executive, and his or her business group. EIP measurement is built into objectives that are established and agreed to at the beginning of the year. Performance against these objectives provides a basis for reward determination.

Long-Term Incentives. Long-term incentives are provided in the form of stock options and restricted stock. The committee and the Board of Directors believe that management ownership of a significant equity interest in the company aligns the long-term interests of management with the company’s shareholders and is an important incentive and contributing factor toward building shareholder value.

Stock options are granted at the market value of the common stock on the date of grant. The value received by the executive from a stock option grant depends on changes in the market price of the company’s common stock during the term of the option. Consequently, the value realized from stock options is proportionate to the incremental changes in shareholder value over the same time period as the stock vesting schedule.

Restricted stock grants represent awards of the company’s common stock with specific vesting restrictions (e.g., continuous employment for a specified period of time). The shares of restricted stock that have been issued prior to 2002 vest in seven (7) years from the date of grant, subject to acceleration based on actual performance relative to earnings per share (EPS) and sales growth targets. Shares of restricted stock granted in 2002 fully vest in two years from the date of their grant and those granted in 2003 fully vest in three years. Until the restrictions are satisfied and the employee takes full ownership of the shares of stock, no dividends are paid, nor is the employee entitled to vote the shares. Restricted stock ties rewards of employees and executives to increasing value of company stock while serving as a tool to retain key employee and executive talent.

Grants of stock options and restricted stock are determined by the Compensation Committee at its discretion based both upon each executive’s actual contribution to the company’s current performance and his or her expected contribution toward meeting the company’s long-term financial and strategic goals.

Grants of stock options and restricted stock to employees are delegated by the Compensation Committee to the CEO to issue at his discretion based both upon an employee’s actual contribution to the company’s current performance and his or her expected contribution toward meeting the company’s and employee’s performance goals.

Mr. Regan joined the company as Chief Executive Officer in November of 1999. In determining his compensation for 2003, the Committee took into consideration the above-described compensation philosophy and information with respect to chief executive compensation for companies of comparable size in similar industries, as well as the company’s performance in 2003 in the following key areas: successful implementation of DRC’s new enterprise business system, the company’s performance in 2003 and the financial condition of the company.

Based upon these factors, Mr. Regan was paid a base salary of $375,000 for 2003, and was awarded a cash bonus of $315,000 and 12,000 shares of restricted stock.

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), imposes limitations on the federal income tax deductibility of compensation paid to the company’s chief executive officer and to each of the other four most highly compensated executive officers of the company. Under these limitations, the company may deduct such compensation only to the extent that during any fiscal year the compensation does not exceed $1,000,000 or meets certain specified conditions (such as certain performance-based compensation that has been approved by the company’s shareholders). Based on the company’s current compensation plans and policies and proposed regulations interpreting the Code, the company and the Compensation Committee believe that, for the near future, there is not a significant risk that the company will lose any significant tax deduction for executive compensation. The company’s compensation plans and policies will be modified to ensure full deductibility of executive compensation if the company and the Compensation Committee determine that such an action is in the best interests of the company.


	The Compensation Committee
	of the Board of Directors

	Francis J. Aguilar, Chairman
	James P. Mullins

The Audit Committee of the Board of Directors reviews the company’s auditing, accounting, financial reporting and internal control functions and selects and engages the company’s independent auditors. In discharging its duties, the Audit Committee reviews and approves the scope of the annual audit, non-audit services to be performed by the independent auditors and the independent auditors’ audit and non-audit fees; reviews the audited financial statements to be included in the Annual Report on Form 10-K for filing with the Securities and Exchange Commission; meets independently with the company’s director of internal audit, independent auditors and senior management; and reviews the general scope of the company’s accounting, financial reporting, annual audit and internal audit programs and matters relating to internal control systems, as well as the results of the annual audit and interim financial statements, and auditor independence issues. The Audit Committee of the Board of Directors is composed of three directors and each of them qualifies as independent under the current listing standards of the Nasdaq National Market and applicable SEC rules and regulations. The Audit Committee operates under a written charter adopted and amended by the Board of Directors. The amended Audit Committee charter is attached to this proxy statement as Annex A.

Prior to commencing the audits, the Committee discussed with Grant Thornton the overall scope and plans for their audit. Upon completion of the audit, the Committee met with Grant Thornton, with and without management present, to discuss the results of their examination, their evaluation of the company’s internal controls, and the overall quality of the company’s financial reporting.

The Committee reviewed with management and with Grant Thornton the audited financial statements for the year ended December 31, 2003, including footnotes as well as management’s discussion and analysis of results of operations included in the Annual Report on Form 10-K. The Committee also discussed with Grant Thornton matters required to be discussed by Statement on Auditing Standards No. 61 “Communication with Audit Committees”, as amended by SAS No. 90, “Audit Committee Communications”. The Committee has received the written disclosures and the letter from Grant Thornton as to that firm’s independence from management and the company, as required by the Independence Standards Board Standard No. 1 “Independence Discussion with Audit Committees,” and has discussed with Grant Thornton their independence. The committee has determined that the provision of the non-audit services by Grant Thornton in 2003, as described below, is compatible with maintaining Grant Thornton’s independence.

Based upon these reviews and discussions, the Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2003 for filing with the Securities and Exchange Commission.


	The Audit Committee of the Board of Directors

	Kenneth F. Kames, Chairman
	James P. Mullins
	Charles P. McCausland

The following graph illustrates the return that would have been realized (assuming reinvestment of dividends) by an investor who invested $100 on December 31, 1998 in each of (i) the company’s common stock, (ii) the NASDAQ Stock Market — Composite U.S. Index and (iii) a Peer Group of companies as listed below:

Notes:


A.	The lines represent monthly index levels derived from compounded daily returns that include all dividends.


B.	The indexes are reweighted daily, using the market capitalization on the previous trading day.
C.	If the monthly interval, based on the fiscal year- end, is not a trading day, the preceding trading day is used.


D.	The index level for all series was set to $100.0 on 12/31/1998.

On November 13, 2003 the Audit Committee dismissed KPMG LLP (“KPMG”) as the company’s independent public accountants. The audit report of KPMG on the company’s consolidated financial statements as of and for the years ended December 31, 2002 and 2001 did not contain an adverse opinion or disclaimer of opinion, nor was such report qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audits of the company’s consolidated financial statements as of and for the years ended December 31, 2002 and 2001 and the subsequent interim period through November 13, 2003, there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreement in connection with their audit report.

In addition, in connection with the audits of the company’s consolidated financial statements as of and for the years ended December 31, 2002 and 2001 and the subsequent interim period through November 13, 2003, as disclosed in the company’s report on Form 8-K filed with the SEC on November 21, 2003, there were no reportable events, as such term is used in Item 304(a)(1)(v) of Regulation S-K, except that KPMG, in its Management Letter to the company following the completion of the audits, noted the following conditions which it considered to be reportable conditions as defined under standards established by the American Institute of Certified Public Accountants:


	•	KPMG noted deficiencies in the processes used by management to review and document new customer contracts and modifications to existing customer contracts for purposes of determining the proper revenue recognition model.

	•	KPMG noted deficiencies in the systems and processes used in the preparation of the financial statements and the lack of proper management review and account reconciliation and analysis.

	•	It was noted that personnel responsible for accounting and financial reporting did not have sufficient background or were overloaded with normal day-to-day activities. It was also noted that they lacked the Securities and Exchange Commission (“SEC”) and Generally Accepted Accounting Principles (“GAAP”) experience necessary to ensure compliance with financial reporting and disclosure requirements. Among other things, it was recommended that the company strengthen its level of SEC and GAAP accounting experience.

The company took a number of measures in 2003 intended to effectively address these reportable conditions.

KPMG noted that none of these reportable conditions was believed to be a material weakness, and it issued an unqualified audit opinion on the financial statements as of and for the years ended December 31, 2002 and 2001. All reportable conditions were discussed with the company’s Audit Committee, and the company has authorized KPMG to respond fully to the inquiries, if any, of its new accountant concerning these reportable conditions.

The company provided KPMG with a copy of the foregoing disclosures and a letter from KPMG confirming its agreement with these disclosures was filed as an exhibit to the company’s report on Form 8-K/A, filed with the SEC on November 25, 2003.

On December 23, 2003 the Audit Committee engaged Grant Thornton LLP (“Grant Thornton”) as the company’s independent public accountants. During the fiscal years ended December 31, 2002 and Decem-

ber 31, 2001 and through the appointment of Grant Thornton, the company did not consult with Grant Thornton regarding the application of accounting principles to a specified transaction, either completed or proposed, the type of audit opinion that might be rendered on the company’s consolidated financial statements, or any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

A representative of Grant Thornton is expected to be present at the Annual Meeting with the opportunity to make a statement if desired and to respond to appropriate questions.

Fees charged to the company by independent auditors for the years 2003 and 2002 were as follows:


(1)	Fees for audits of the company’s annual financial statements and review of financial statements included in quarterly reports on Form 10-Q.
(2)	Fees related to filings with the SEC for an acquisition.
(3)	Fees for professional services related to sales tax audit and 2002 tax return review.
(4)	Fees paid by the company related to accounting for acquisitions, divestitures and pension accounting.

The Audit Committee may delegate pre-approval authority for services not prohibited by law to be performed by DRC’s independent auditors to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate its authority to management to pre-approve services to be performed by the independent auditor.

The Audit Committee approved 100% of the 2003 fees above and all KPMG engagements for 2002. The board approved KPMG services but not specific dollar amounts in 2002. Only full time permanent employees of Grant Thornton worked on the company’s fiscal year 2003 audit.

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than ten percent of a registered class of our equity securities to file reports with the Securities and Exchange Commission disclosing their ownership, and changes in their ownership, of our common stock. Copies of these reports must also be furnished to us. Based solely upon a review of these copies, we believe that during 2003 all filing requirements were met.

Proposals of stockholders submitted pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 for consideration at the 2005 Annual Meeting of Stockholders must be received by the company no later than November 28, 2004 in order to be considered for inclusion in the company’s proxy materials for that meeting.

For proposals that stockholders intend to present at the 2005 Annual Meeting of Stockholders that will not be included in the company’s proxy materials, if the stockholder fails to notify the company of such intent on or before February 13, 2005, then the proxies that management solicits for the 2005 Annual Meeting will include discretionary authority to vote on the stockholder’s proposal, if it is properly presented at the meeting.

The Board of Directors does not know of any business that will be presented to the Annual Meeting other than that referred to in the accompanying notice. If other business properly comes before the Annual Meeting, it is intended that the proxies will be voted in the discretion of the persons voting the proxies unless specific instructions to the contrary are given.

A copy of the company’s Annual Report to Stockholders and of the company’s annual report on Form 10-K filed with the Securities and Exchange Commission accompany this proxy statement. Copies of the exhibits to the company’s annual report on Form 10-K are available to stockholders, upon the payment of fees to cover the company’s cost in furnishing such exhibits, by writing to the Treasurer’s office, Dynamics Research Corporation, 60 Frontage Road, Andover, Massachusetts 01810-5498.

All stockholders are urged to complete and mail the enclosed proxy promptly whether or not you plan to attend the meeting in person. The enclosed envelope requires no postage if mailed in the U.S.A. or Canada. Stockholders attending the meeting may revoke their proxies and personally vote on all matters that are considered. It is important that your shares be voted.

The Audit Committee’s purpose is to oversee the accounting and financial reporting process of the Company and the audits of the financial statements of the Company and to provide assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting and internal control functions of the Company.

The Audit Committee shall be comprised of at least three directors, each of whom shall meet the independence and qualification requirements contained in the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”), the Nasdaq National Market and the Sarbanes-Oxley Act of 2002. At least one member of the Audit Committee shall, in the judgment of the Board, be an audit committee financial expert in accordance with the rules and regulations of the SEC and the provisions of the Sarbanes-Oxley Act of 2002 and at least one member (who may also serve as the Audit Committee financial expert) shall, in the judgment of the Board, have accounting or related financial management expertise in accordance with Nasdaq listing standards. The Board, on the recommendation of the Nominating and Governance Committee, shall appoint the members of the Audit Committee.


A.	The Audit Committee shall have the authority to select, retain, oversee and set compensation for the independent auditors, accounting or other consultants to advise the Committee. The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.

B.	The Audit Committee shall make regular reports to the Board.

C.	The Audit Committee shall review and approve in advance any audit and permitted non-audit services to be provided to the Company by the Company’s independent auditors; the Audit Committee has the sole authority to make these approvals although such approval authority may be delegated to any Audit Committee member so long as the approval is presented to the full Audit Committee at a later time.

D.	The Audit Committee shall at least annually, unless otherwise specified:


	1.	Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

	2.	Review the annual audited financial statements with management and the independent auditors, including major issues regarding accounting and auditing principles and practices as well as the adequacy of internal controls that could significantly affect the Company’s financial statements.

	3.	Review an analysis prepared by the independent auditor of significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including


		a description of any transactions as to which management obtained Statements on Auditing Standards No. 50 letters.

	4.	Review the Company’s quarterly financial results prior to the filing of the Company’s Form 10-Q.

	5.	Review major changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management.

	6.	Notify the Board of the selection and appointment of the independent auditor, which firm is ultimately accountable to the Audit Committee and the Board.

	7.	Review the experience and qualifications of the senior members of the independent auditor team and the quality control procedures of the independent auditor. Review the experience and qualifications of the Company’s senior finance executives.

	8.	Approve the fees to be paid to the independent auditor.

	9.	Establish guidelines for the retention of the independent auditor for any non-audit service. Current guidelines are set forth on Exhibit A attached to this Charter.

	10.	Receive periodic reports from the independent auditor regarding the auditor’s independence, discuss such reports with the auditor, and if so determined by the Audit Committee, recommend that the Board take appropriate action to satisfy itself of the independence of the auditor.

	11.	Recommend to the Board guidelines for the Company’s hiring of employees of the independent auditor who were engaged on the Company’s account.

	12.	Review the appointment and replacement of the senior internal auditing director.

	13.	Review the significant reports to management prepared by the internal auditing department and management’s responses.

	14.	Meet with the independent auditor prior to the quarterly and year-end audits to review the planning and staffing of the audits.

	15.	Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit.

	16.	Review with the independent auditor any problems or difficulties the auditor may have encountered and any management letter provided by the auditor and the Company’s response to that letter. Such review should include:


	(a)	Any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information, and any disagreements with management.

	(b)	Any changes required in the planned scope of the internal audit.

	(c)	The internal audit department responsibilities, budget and staffing.


	17.	Review and approve the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.

	18.	Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Ethics.


	19.	Review with the Company’s General Counsel legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquiries received from regulators or governmental agencies.

	20.	Meet with the chief financial officer, the senior internal auditing director and the independent auditor in separate executive sessions.

	21.	Assess its performance of the duties specified in this charter and report its findings to the Board of Directors.


E.	The Audit Committee shall review and approve all related-party transactions.

F.	The Audit Committee shall establish and monitor procedures for:


	1.	The confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and

	2.	The receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters.

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditor or to assure compliance with laws and regulations and the Company’s Code of Conduct.


	Foreign statutory audits
	11K and ERISA audits
	Carve-out audits in connection with divestitures
	Tax compliance including preparation and filing returns
	Tax counseling
	Due diligence assistance in connection with M&A transactions
	Providing “comfort letters” in connection with securities offerings
	Litigation support involving disputes related to financial statements audited by the independent auditor

	Unallowable Non-Audit Services

	Information Technology consulting services
	Human Resources consulting services
	Management consulting services
	Valuation services
	M&A transaction structuring services

The Nominating & Governance Committee is appointed by the Board of Directors (the “Board”) (1) to assist the Board by identifying individuals qualified to become Board members, and to recommend to the Board the director nominees; (2) to develop and recommend to the Board the Corporate Governance Guidelines applicable to the Company and consider on-going developments in corporate governance practices; (3) to lead the Board in its annual review of the Board’s performance; (4) to recommend to the Board director nominees for each committee; and (5) to make an annual report to the Board on succession planning.

The Nominating & Governance Committee shall consist of no fewer than two members. The members of the Nominating & Governance Committee shall meet the independence requirements of the Nasdaq rules.

The members of the Nominating & Governance Committee shall be appointed and replaced by the Board.


	1.	The Nominating & Governance Committee shall have the sole authority to retain and terminate any search firm to be used to identify director candidates and shall have sole authority to approve the search firm’s fees and other retention terms. The Nominating & Governance Committee shall also have authority to obtain advice and assistance from inside directors, management, and internal or external legal, accounting or other advisors.

	2.	The Nominating & Governance Committee shall actively seek individuals qualified to become board members and shall make a recommendation to the Board regarding all nominees for Board membership.

	3.	The Nominating & Governance Committee shall establish criteria for Board membership including, among other things specific minimum qualifications and specific qualities or skills that the Nominating & Governance Committee believes are necessary for one or more of the board members to possess.

	4.	The Nominating & Governance Committee shall consider and evaluate equally candidates proposed by shareholders, non-management directors, the chief executive officer, other executive officers, third-party search firms or other sources and shall conduct appropriate inquiries into the backgrounds and qualifications of possible candidates.

	5.	The Nominating & Governance Committee shall review and assess periodically the structure, size, composition and operation of the Board and each committee of the Board.

	6.	The Nominating & Governance Committee shall receive comments from all directors and report annually to the Board with an assessment of the Board’s performance, to be discussed with the full Board following the end of each fiscal year.


	7.	The Nominating & Governance Committee shall review and reassess the adequacy of the Corporate Governance Guidelines of the Company and recommend any proposed changes to the Board for approval.

	8.	The Nominating & Governance Committee may form and delegate authority to subcommittees when appropriate.

	9.	The Nominating & Governance Committee shall make regular reports to the Board.

	10.	The Nominating & Governance Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Nominating & Governance Committee shall annually review its own performance.

	11.	The Nominating & Governance Committee shall consider policies for succession and transitional leadership in the event the CEO becomes unable to perform his or her duties. The Nominating & Governance Committee shall make an annual report to the Board on succession planning.

PROXY

DYNAMICS RESEARCH CORPORATION

Annual Meeting of Stockholders — May 13, 2004

The undersigned hereby appoints Elise P. Caffrey and Richard A. Covel and each of them as proxies, with full power of substitution and re-substitution to each and hereby authorizes them to represent and to vote as designated on the reverse side, at the Annual Meeting of Stockholders of Dynamics Research Corporation (the “Company”) on May 13, 2004 at 2:00 P.M., Boston time, and at any adjournments thereof, all of the shares of the Company held of record by the undersigned on March 22, 2004 which the undersigned would be entitled to vote if personally present.

(Continued and to be signed on the reverse side)

ANNUAL MEETING OF STOCKHOLDERS OF

DYNAMICS RESEARCH CORPORATION

May 13, 2004

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

- Please detach along perforated line and mail in the envelope provided. -

The Board of Directors recommends a vote FOR the following proposal:

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x

1. Election of Directors: Fixing the number of Directors and Election of the Class II Directors listed below


		NOMINEES:
o	FOR ALL NOMINEES	O Francis J. Aguilar
		O John S. Anderegg, Jr

o	WITHHOLD AUTHORITY FOR ALL NOMINEES

o	FOR ALL EXCEPT (See instructions below)


INSTRUCTION:		To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: l



To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.		o

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. EVERY PROPERLY SIGNED PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, OR IF NO DIRECTION IS GIVEN, PROXIES WILL BE VOTED FOR THE PROPOSAL. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.

Signature of Stockholder

Date:

Signature of Stockholder

Date:


Note:		Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.


o Preliminary Proxy Statement		o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material under Rule 14a-12


		Amount and Nature of			Percent
Beneficial Owner (1)		Beneficial Ownership (2)			of Class

John S. Anderegg, Jr.			808,798	(3)		9.7
James P. Regan			299,292			3.6
Francis J. Aguilar			71,715	(4)		*
Kenneth F. Kames			26,200			*
Charles P. McCausland			1,666			*
James P. Mullins			34,960			*
William C. Hoover			54,148			*
Richard A. Covel			34,229			*
David Keleher			56,159			*
John L. Wilkinson			29,270			*
All directors and executive officers as a group (10 persons)			1,416,437			17.0
Fidelity Management & Research Co			1,204,007	(5)		14.4
	1 Federal Street Boston, MA 02109
Kennedy Capital Management, Inc			1,182,006	(6)		14.2
	10829 Olive Blvd St. Louis, MO 63141



								Long-Term
								Compensation
				Annual
				Compensation				Restricted			Shares
								Stock			Underlying		All Other
Name and				Salary		Bonus		Awards			Options		Compensation
Principal Position		Year		($)		($)		($)(6)			(#)		($)(2)

James P. Regan			2003		375,000		315,000		217,200	(3)				13,002
	Chairman & Chief Executive Officer		2002		350,000		—		59,700	(4)		—		2,750
			2001		320,000		400,000		223,500	(5)		225,000		2,550
William C. Hoover(1)			2003		213,939		125,000		108,600	(3)		100,000		1,038
	President & Chief Operating Officer
Richard A. Covel			2003		183,900		33,506		32,580	(3)				8,370
	Vice President & General Counsel		2002		176,800		—		19,900	(4)		—		3,226
			2001		170,000		38,833		89,400	(5)		50,000		1,798
David Keleher			2003		232,600		105,000		108,600	(3)				9,000
	Vice President & Chief Financial		2002		220,500		—		29,850	(4)		—		2,750
	Officer		2001		210,000		100,000		134,100	(5)		60,000		2,550
John L. Wilkinson			2003		180,820		37,557		—					8,418
	Vice President & General Manager,		2002		174,720		—		9,950	(4)		—		3,534
	Human Resources		2001		168,000		46,052		62,580	(5)		45,000		2,550


			Value of
			Restricted		Restricted Shares at 12/31/03
	# Restricted		Shares		Vesting in 3 Years or Less
	Shares Held		Held
	12/31/2003		12/31/03(a)		# Awarded		Grant Date		Vest Schedule

James P. Regan		31,000	$	500,030		6,000		2/19/2003		50%/year
William C. Hoover		—		—		—		—		—
Richard A. Covel		12,000	$	193,560		2,000		2/19/2003		50%/year
David Keleher		18,000	$	290,340		3,000		2/19/2003		50%/year
John L. Wilkinson		8,000	$	129,040		1,000		2/19/2003		50%/year



	Individual Grants										Potential Realizable Value
											at Assumed Annual Rates
	Number of			% of Total							of Stock Price
	Securities			Options							Appreciation for Option
	Underlying			Granted to			Exercise				Term(4)
	Options			Employees in			Price Per		Expiration
Name	Granted			2003			Share(3)		Date		5%		10%

James P. Regan(1)		—			—			—		—		—		—
William C. Hoover		100,000	(2)		88.1	%	$	12.14		4/7/2013	$	763,478	$	1,934,803
Richard A. Covel(1)		—			—			—		—		—		—
David Keleher(1)		—			—			—		—		—		—
John L. Wilkinson(1)		—			—			—		—		—		—


(1)	Title of each class of securities to which transaction applies:


(2)	Aggregate number of securities to which transaction applies:



	Estimated Annual Benefit
	For Indicated Years of Service

Average Annual Earnings	15		20		25		30 or more

$100,000	$	15,739	$	20,985	$	26,232	$	31,478
$125,000	$	20,739	$	27,652	$	34,565	$	41,478
$150,000	$	25,379	$	34,318	$	42,898	$	51,477
$200,000*	$	35,738	$	47,651	$	59,564	$	71,477


Symbol		CRSP Total Returns Index for:	12/1998	12/1999	12/2000	12/2001	12/2002	12/2003

	n	DYNAMICS RESEARCH CORPORATION	100.0	144.7	131.9	305.5	238.5	274.6

	*	Nasdaq Stock Market (US Companies)	100.0	185.4	111.8	88.8	61.4	91.8
	Δ	Self-Determined Peer Group	100.0	528.9	215.2	417.3	318.0	499.1


ANTEON INTERNATIONAL CORP		CACI INTERNATIONAL INC
M T C TECHNOLOGIES INC		MANTECH INTERNATIONAL CORP
S I INTERNATIONAL INC		S R A INTERNATIONAL INC
TITAN CORP


Type of Fee		2003		2002

Audit Fees (1)
	Grant Thornton 2003 Audit	$	181,020	$	—
	KPMG 2003 Quarterly Reviews & Consent		223,494		—
	KPMG 2002 Audit		—		421,204
	KPMG 2001 and 2000 re-audit		—		655,146
	Arthur Andersen		—		9,500

Total Audit Fees			404,514		1,085,850
Audit-related fees (2)
	KPMG		—		10,000
Tax Fees (3)
	Grant Thornton		—		—
	KPMG		17,000		7,000
All Other Fees (4)
	Grant Thornton		—		—
	KPMG		—		18,650
	Arthur Andersen		—		8,670

Total Fees Charged		$	421,514	$	1,130,170


	By the Order of the Board of Directors

	Richard A. Covel
	Clerk


x	No fee required.


(4)	Proposed maximum aggregate value of transaction:


o	Fee paid previously with preliminary materials:


(1)	Amount Previously Paid: