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Comptroller of Treasury v. Fairchild Engine and Airplane Corp.

Decided: December 20, 1961.

COMPTROLLER OF THE TREASURY, ETC.
v.
FAIRCHILD ENGINE AND AIRPLANE CORPORATION



Appeal from the Circuit Court for Washington County; Cobey, J.

Brune, C. J., and Henderson, Prescott, Horney and Marbury, JJ. Henderson, J., delivered the opinion of the Court. Horney, J., dissents.

Henderson

This appeal is from an order of court reversing a decision of the Comptroller and entering a judgment against the Comptroller in the amount of $49,486.40, representing a refund of sales and use taxes previously paid by Fairchild. The facts are virtually undisputed.

On July 1, 1954, Fairchild entered into a "study" contract with the United States Air Force, to determine whether it was feasible, from a technical point of view, to build a certain type of missile and use it as a decoy to confuse enemy radar by simulating an attack plane, the B-52. This project was completed in the spring of 1955. Thereafter, Fairchild submitted various proposals showing manufacturing details

and estimated costs. On September 21, 1955, an elaborate contract was executed of the cost plus a fixed fee type. This was called the "goose" contract, from the name of the missile. The initial appropriation was $3,550,000.00, with the total cost estimated at some $14,000,000.00. Fairchild was given complete design responsibility, as the prime contractor. Most of the work was to be performed at Hagerstown, Maryland, the assembly point.

The contract was described as a "Research and Development Program for Weapon System 123 A." Among other things, the contractor agreed to "perform the following services:

Item 1 -- Conduct a research and development program which will result in the development to completion of a weapon system in accordance with MCPHMS Document, dated 16 June 1955, * * * to include * * * the following:

(a) Provide a full-scale mock-up of the operational weapon system and participate in a mock-up inspection by the Air Force.

(b) Design and manufacture hardware for use in the research and development program, including a quantity of experimental missiles. The configurations and quantity of the hardware (missiles, ground equipment, etc.,) will be such that they are suitable for use in the flight program established by the Contractor. * * *.

(c) Conduct flight test program to demonstrate compliance of the aircraft requirements in respect to range, performance accuracy, and, to a limited extent, simulation. The flight test program will include demonstration of the weapon system ground equipment and launching techniques, * * *.

(d) Provide all the facilities, supplies and services necessary to accomplish Item 1, except for those provided by the Government * * *, including the repair and revision of experimental hardware in order to make tests and retests within the development program.

Also to be included are the parts and material required for these purposes. The costs incurred by the Contractor in providing such facilities shall be treated as ...


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