Source: https://www.legalcrystal.com/case/105272/united-states-vs-new-mexico
Timestamp: 2018-02-23 18:47:55
Document Index: 540283628

Matched Legal Cases: ['§ 72', '§ 72', '§ 72', '§ 9', '§ 9', '§ 9', '§ 72', '§ 72']

United States Vs New Mexico - Citation 105272 - Court Judgment | LegalCrystal
United States Vs. New Mexico - Court Judgment
LegalCrystal Citation legalcrystal.com/105272
Case Number 455 U.S. 720
united states v. new mexico - 455 u.s. 720 (1982) u.s. supreme court united states v. new mexico, 455 u.s. 720 (1982) united states v. new mexico no. 80-702 argued december 8, 1981 decided march 24, 1982 455 u.s. 720 certiorari to the united states court of appeals for the tenth circuit syllabus sandia corporation and zia company have contracts with the federal government to manage certain government-owned atomic laboratories located in new mexico. los alamos constructors, inc., has a government contract for construction and repair work at one of the laboratories. the contracts use an "advanced funding" procedure to meet contractor costs whereby the contractor is allowed to pay creditors and employees with drafts.....
U.S. Supreme Court United States v. New Mexico, 455 U.S. 720 (1982)
Held: The contractors, as independent taxable entities, are not protected by the Constitution's guarantee of federal supremacy, and hence are subject to the state taxes in question. Pp. 455 U. S. 730 -744.
Government funds. Tax immunity is appropriate only when the state levy falls on the United States itself, or on an agency or instrumentality so closely connected to the Government that the two cannot realistically be viewed as separate entities, at least insofar as the activity being taxed is concerned. A finding of constitutional tax immunity therefore requires something more than the invocation of traditional agency notions. Pp. 455 U. S. 730 -738.
(b) With respect to the New Mexico use tax, the contractors cannot be termed "constituent parts" of the Federal Government. The congruence of professional interests between the contractors and the Government is not complete, the contractors' relationship with the Government having been created for limited and carefully defined purposes. Allowing a State to apply use taxes to such entities does not offend the notion of federal supremacy. United Sates v. Boyd, 378 U. S. 39 . For similar reasons, the New Mexico gross receipts tax must be upheld as applied to funds received by the contractors to meet salaries and internal costs. As to the tax on sales to the contractors, the facts that Sandia and Zia make purchases in their own names and presumably are themselves liable to the vendors, that the vendors are not informed that the Government is the only party with an independent interest in the purchase, and that the contractors need not obtain Government approval for each purchase, all demonstrate that the contractors have a substantial independent role in making purchases, and that the identity of interests between the Government and the contractors is far from complete. As a result, sales to Sandia and Zia are in neither a real nor a symbolic sense sales to the "United States itself." Kern-Limerick, Inc. v. Scurlock, 347 U. S. 110 , distinguished. The fact that title passes directly from the vendor to the Government cannot alone make the transaction a purchase by the United States, so long as the purchasing entity, in its role as purchaser, is sufficiently distinct from the Government. Pp. 455 U. S. 738 -743.
(AEC), now the Department of Energy (DOE). [ Footnote 1 ] Like many of the Government's contractual undertakings, DOE management contracts generally provide the private contractor with its costs plus a fixed fee. But in several ways, DOE agreements are a unique species of contract, designed to facilitate long-term private management of Government-owned research and development facilities. As the parties to this case acknowledge, the complex and intricate contractual provisions make it virtually impossible to describe the contractual relationship in standard agency terms. See App.196-197; Hiestand & Florsheim, The AEC Management Contract Concept, 29 Federal B.J. 67 (1969) (Hiestand & Florsheim). While subject to the general direction of the Government, the contractors are vested with substantial autonomy in their operations and procurement practices. [ Footnote 2 ]
course of the contract, App. 335, and the company receives complete reimbursements for salary outlays and other expenditures. Id. at 402. [ Footnote 3 ]
The management contracts between the Government and the three contractors have a number of significant features in common. As in most DOE atomic facility management agreements, the contracts provide that title to all tangible personal property purchased by the contractors passes directly from the vendor to the Government. App. 231a (Zia); id. at 34 (Sandia). [ Footnote 4 ] Similarly, the Government bears the
risk of loss for property procured by the contractors. Zia and LACI must submit an annual voucher of expenditures for Government approval. Id. at 20 (Zia); id. at 27 (LACI). [ Footnote 5 ] And the agreements give the Government control over the disposition of all property purchased under the contracts, as well as over each contractor's property management procedures. Disputes under the contracts are to be resolved by a DOE contracting official. Id. at 128-129 (Zia standard terms) and 157-158 (Sandia standard terms).
"may be . . . 'independent contractor[s],' rather than . . . 'servant[s]' for . . . given 'function[s] under' the contract[s] ( e.g., directing the details of day-to-day . . . operations and the hiring and direct supervision of employees),"
App. 204 (Fifth Semiannual Report of the Atomic Energy Commission (1949)). The procedure allows contractors to pay creditors and employees with drafts drawn on a special bank account in which United States Treasury funds are deposited. [ Footnote 6 ]
N.M.Stat.Ann. § 72-16A-4 (Supp.1975). [ Footnote 7 ] In effect, the gross receipts tax operates as a tax on the sale of goods and services. The State also levies a compensating use tax, equivalent in amount to the gross receipts tax, "[f]or the privilege of using property in New Mexico." § 72-16A-7. This is imposed on property acquired out-of-state in a "transaction that would have been subject to the gross receipts tax had it occurred within [New Mexico]." § 72-16A-7(A)(2). [ Footnote 8 ] Thus the compensating use tax functions
Without objection, Zia and LACI each year paid the New Mexico gross receipts tax on the fixed fees they received from the Federal Government. But the Government argued that the contractors' other expenditures and operations are constitutionally immune from state taxation. In July, 1975, the United States therefore initiated this suit in the United States District Court for the District of New Mexico, seeking a declaratory judgment that advanced funds are not taxable gross receipts to the contractors; that the receipts of vendors selling tangible property to the United States through the contractors cannot be taxed by the State; and that the use of Government-owned property by the contractors is not subject to the State's compensating use tax. App. 11-12. [ Footnote 9 ]
The other contractual provisions relied on by the District Court -- federal control over procurement systems, management practices, and the like -- failed to impress the Court of Appeals. It concluded that the Government-contractor relationship, viewed as a whole, did not " so incorporat[e] [the contractors] into the government structure as to [make them] instrumentalities of the United States. . . .'" Id. at 118, quoting United States v. Boyd, 378 U. S. 39 , 378 U. S. 48 (1964). And that Sandia received no fee for its services was of little consequence, in the court's view, because "decisions on the amount of fee, if any, to be paid a government contractor are not made primarily with agency consequences in mind." 624 F.2d at 120. Since the 1977 contractual amendments, by their terms, added nothing of substance to the agreements, they did not affect the court's analysis. The District Court was directed to enter summary judgment for New Mexico. Id. at 121.
With the famous declaration that "the power to tax involves the power to destroy," McCulloch v. Maryland, 4 Wheat. 316, 17 U. S. 431 (1819), Chief Justice Marshall announced for the Court the doctrine of federal immunity from state taxation. In so doing he introduced the Court to what has become a "much litigated and often confused field," United States v. City of Detroit, 355 U. S. 466 , 355 U. S. 473 (1958), one that has been marked from the beginning by inconsistent decisions and excessively delicate distinctions.
4 Wheat. at 17 U. S. 436 . Not long afterwards, however, Chief Justice Marshall, speaking for the Court, seemingly disregarded the McCulloch dictum in striking down a state tax on interest income from federal bonds, explaining that such levies cannot constitutionally fall on an "operation essential to the important objects for which the government was created." Weston v. City Council of Charleston, 2 Pet. 449, 27 U. S. 467 (1829). During the following century, the Court took to heart Weston's expansive analysis of federal tax immunity, invalidating, among many others, state taxes on the income of federal employees, Dobbins v. Commissioners of Erie County, 16 Pet. 435 (1842); on income derived from property leased from the Federal Government, Gillespie v. Oklahoma, 257 U. S. 501 (1922); and on sales to the United States, Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218 (1928). [ Footnote 10 ]
These decisions, it has been said, were increasingly divorced both from the constitutional foundations of the immunity doctrine and from "the actual workings of our federalism," Graves v. New York ex rel. O'Keefe, 306 U. S. 466 , 306 U. S. 490 (1939) (Frankfurter, J., concurring), and in James v. Dravo Contracting Co., 302 U. S. 134 (1937), by a 5-4 vote, the Court marked a major change in course. Over the dissent's
justifiable objections that it was "overrul[ing], sub silentio, a century of precedents," id. at 302 U. S. 161 , the Court upheld a state tax on the gross receipts of a contractor providing services to the Federal Government:
Id. at 302 U. S. 150 , quoting Willcuts v. Bunn, 282 U. S. 216 , 282 U. S. 225 (1931).
Even the Court's post- James decisions, however, cannot be set in an entirely unwavering line. United States v. Allegheny County, 322 U. S. 174 (1944), invalidated a state property tax that included in the assessment the value of federal machinery held by a private party; 14 years later, that decision, in large part, was overruled by United States v. City of Detroit, supra. See United States v. County of Fresno, 429 U. S. 452 , 429 U. S. 462 -463, n. 10 (1977). In Livingston v. United States, 364 U. S. 281 (1960), summarily aff'g 179 F.Supp. 9 (EDSC 1959), the Court, without opinion or citation, approved the invalidation of a state use tax as applied to a federal contractor. Yet United States v. Boyd, supra, upheld a virtually identical state tax, seemingly confining Livingston to its "extraordinary" facts. 378 U.S. at 378 U. S. 45 , n. 6.
immunity status of federal contractors. Thus, Alabama v. King & Boozer, supra, declined to find immunity in part because the contractors involved lacked the "status of agents," 314 U.S. at 314 U. S. 13 , and United States v. Township of Muskegon, 355 U. S. 484 , 365 U. S. 486 (1958), upheld a use tax on a federal contractor with the caveat that the "case might well be different if [the contractor] . . . could properly be called a servant' of the United States in agency terms." See Kern-Limerick, Inc. v. Scurlock, 347 U. S. 110 (1954). Yet James v. Dravo Contracting Co., supra, stated flatly that tax immunity is not dependent "`upon the nature of the agents, or upon the mode of their constitution, or upon the fact that they are agents.'" 302 U.S. at 302 U. S. 154 , quoting Railroad Co. v. Peniston, 18 Wall. 5, 85 U. S. 36 (1873) (plurality opinion). And United States v. Boyd, supra, rejected the Government's argument that its contractors were federal agents, and therefore tax immune, stating simply that the private entities were not "instrumentalities of the United States." 378 U. S:, at 378 U. S. 48 .
We have concluded that the confusing nature of our precedents counsels a return to the underlying constitutional principle. The one constant here, of course, is simple enough to express: a State may not, consistent with the Supremacy Clause, U.S.Const., Art. VI, cl. 2, lay a tax "directly upon the United States." Mayo v. United States, 319 U. S. 441 , 319 U. S. 447 (1943). While
First Agricultural Bank v. State Tax Comm'n, 392 U. S. 339 , 392 U. S. 350 (1968) (dissenting opinion), the Court has never questioned the propriety of absolute federal immunity from state taxation. And after 160 years, the doctrine has gathered "a momentum of authority that reflects, if not a detailed exposition of considerations of policy demanded by our federal system, certainly a deep instinct
that there are such considerations. . . ." City of Detroit v. Murray Corp., 355 U. S. 489 , 355 U. S. 503 -504 (1958) (opinion of Frankfurter, J.).
314 U.S. at 314 U. S. 9 . That the contractor is purchasing property for the Government is similarly irrelevant; in King & Boozer, title to goods purchased by the contractor vested in the United States immediately upon shipment by the seller. Id. at 314 U. S. 13 .
profit," is "a separate and distinct taxable activity." United States v. Boyd, 378 U.S. at 378 U. S. 44 . Indeed, immunity cannot be conferred simply because the tax is paid with Government funds; that was apparently the case in Boyd, where the contractor made expenditures under an advanced funding arrangement similar to the one involved here. Id. at 378 U. S. 41 .
What the Court's cases leave room for, then, is the conclusion that tax immunity is appropriate in only one circumstance: when the levy falls on the United States itself, or on an agency or instrumentality so closely connected to the Government that the two cannot realistically be viewed as separate entities, at least insofar as the activity being taxed is concerned. This view, we believe, comports with the principal purpose of the immunity doctrine, that of forestalling "clashing sovereignty," McCulloch v. Maryland, 4 Wheat. at 17 U. S. 43 , by preventing the States from laying demands directly on the Federal Government. See City of Detroit v. Murray Corp., 355 U.S. at 355 U. S. 504 -505 (opinion of Frankfurter, J.). As the federal structure -- along with the workings of the tax immunity doctrine [ Footnote 11 ] -- has evolved, this command has taken on essentially symbolic importance, as the visible "consequence of that [federal] supremacy which the constitution has declared." McCulloch v. Maryland, 4 Wheat. at 17 U. S. 436 . At the same time, a narrow approach to governmental tax immunity accords with competing constitutional imperatives,
by giving full range to each sovereign's taxing authority. See Graves v. New York ex rel. O'Keefe, 306 U.S. at 306 U. S. 483 .
Thus, a finding of constitutional tax immunity requires something more than the invocation of traditional agency notions: to resist the State's taxing power, a private taxpayer must actually "stand in the Government's shoes." City of Detroit v. Murray Corp., 355 U.S. at 355 U. S. 503 (opinion of Frankfurter, J.). That conclusion is compelled by the Court's principal decisions exploring the nature of the Constitution's immunity guarantee. Chief Justice Hughes' opinion for the Court in James, which set the doctrine on its modern course, suggested that a state tax is impermissible when the taxed entity is "so intimately connected with the exercise of a power or the performance of a duty" by the Government that taxation of it would be " a direct interference with the functions of government itself.'" 302 U.S. at 302 U. S. 157 , quoting Metcalf & Eddy v. Mitchell, 269 U. S. 514 , 269 U. S. 524 (1926). And the point is settled by Boyd, the Court's most recent decision in the field. There, the Government argued that its contractors were tax-exempt because they were federal agents. Without any discussion of traditional agency rules, the Court rejected that suggestion out-of-hand, declaring that "we cannot believe that [the contractors are] `so assimilated by the Government as to become one of its constituent parts.'" 378 U.S. at 378 U. S. 47 , quoting United States v. Township of Muskegon, 355 U.S. at 355 U. S. 486 . And the Court continued:
378 U.S. at 378 U. S. 48 . The Court's other cases describing the nature of a federal instrumentality have used similar language: "virtually . . . an
arm of the Government," Department of Employment v. United States, 385 U.S. at 385 U. S. 359 -360; "integral parts of [a governmental department]," and "arms of the Government deemed by it essential for the performance of governmental functions," Standard Oil Co. v. Johnson, 316 U. S. 481 , 316 U. S. 485 (1942).
If the immunity of federal contractors is to be expanded beyond its narrow constitutional limits, it is Congress that must take responsibility for the decision, by so expressly providing as respects contracts in a particular form, or contracts under particular programs. James v. Dravo Contracting Co., 302 U.S. at 302 U. S. 161 ; Carson v. Roane-Anderson Co., 342 U. S. 232 , 342 U. S. 234 (1952). And this allocation of responsibility is wholly
appropriate, for the political process is "uniquely adapted to accommodating the competing demands" in this area. Massachusetts v. United States, 435 U. S. 444 , 435 U. S. 456 (1978) (plurality opinion). See United States v. City of Detroit, 355 U.S. at 355 U. S. 474 . But, absent congressional action, we have emphasized that the States' power to tax can be denied only under "the clearest constitutional mandate." Michelin Tire Corp. v. Wages, 423 U. S. 276 , 423 U. S. 293 (1976).
So far as the use tax is concerned, United States v. Boyd, supra, controls this case. The contracts at issue in Boyd were standard AEC management contracts, in all relevant respects identical to the ones here. The contractors performed maintenance and construction work at Government facilities, under the general direction of the Government. They procured materials, and paid for the goods with Government funds under an advanced funding arrangement; title passed directly from the vendor to the United States. The contractors owned none of the property involved, and received a fixed annual fee. Indeed, one of the contractor's purchase orders stated that it made purchases "for and on behalf of the Government." 378 U.S. at 378 U. S. 42 , n. 4. And the Tennessee use tax did not differ in any significant way from the use tax now before us. [ Footnote 12 ]
As noted above, the Government argued that this close contractual relationship made the contractors federal agents, and therefore tax-immune. Yet the Court had no difficulty upholding the application of the Tennessee tax, concluding that " [t]he vital thing' is that [the contractors are] `using the property in connection with [their] own commercial activities.'" Id. at 378 U. S. 45 , quoting United States v. Township of Muskegon, 355 U.S. at 355 U. S. 486 . That the federal property involved was being used for the Government's benefit -- something that, by definition, will be true in virtually every management contract -- was irrelevant, for the contractors remained distinct entities pursuing "private ends," and their actions remained "commercial activities carried on for profit." 378 U.S. at 378 U. S. 44 . For that reason, the contractors
had not become "instrumentalities" of the United States. Id. at 378 U. S. 48 . [ Footnote 13 ]
purposes. Allowing the States to apply use taxes to such entities does not offend the notion of federal supremacy. [ Footnote 14 ]
For similar reasons, the New Mexico gross receipts tax must be upheld as applied to funds received by the contractors to meet salaries and internal costs. Once it is conceded that the contractors are independent taxable entities, it cannot be disputed that their gross income is taxable. This conclusion follows directly from James v. Dravo Contracting Co., supra, where the Court upheld a state tax reaching "gross amounts received from the United States." 302 U.S. at 302 U. S. 137 . In any event, incurring obligations to achieve contractual ends is not significantly different from using property for the same purposes. And despite the Government's arguments, the use of advanced funding does not change the analysis. That device is, at heart, an efficient method of reimbursing contractors -- something the Government has apparently recognized in contexts other than tax litigation. See App. 31 (Sandia contract), 189 (Ninth Semiannual Report of the Atomic Energy Commission (1951)), 191 (same). If receipt of advanced funding is coextensive with status as a federal instrumentality, virtually every federal contractor is, or could easily become, immune from state taxation.
New Mexico's tax on sales to the contractors presents a more complex problem. So far as the use tax discussed above is concerned, the subject of the levy is the taxed entity's beneficial use of the property involved. See United States v. Boyd, 378 U.S. at 378 U. S. 44 . Unless the entity as a whole is one of the Government's "constituent parts," then, a
Such was the Court's conclusion in Kern-Limerick, Inc. v. Scurlock, supra, a decision on which the Government heavily relies. The contractor in that case identified itself as a federal procurement agent, and, when it made purchases, title passed directly to the Government; the purchase orders themselves declared that the purchase was made by the Government, and that the United States was liable on the sale. Equally as important, the contractor itself was not liable for the purchase price, and it required specific Government approval for each transaction. See 347 U.S. at 347 U. S. 120 -121. And, as the Court emphasized, the statutory procurement scheme envisioned the use of federal purchasing agents. Id. at 347 U. S. 114 . The Court concluded that a sale to the contractor was, in effect, a sale to the United States, and therefore not a proper subject for the Arkansas sales tax. [ Footnote 15 ] As we have noted elsewhere, Kern-Limerick "stands only for the proposition that the State may not impose a tax the legal incidence of which falls on the Federal Government." United States v. County of Fresno, 429 U.S. at 429 U. S. 459 -460, n. 7.
the purchase price, see Tr. of Oral Arg. 425, [ Footnote 16 ] Sandia and Zia nevertheless make purchases in their own names -- Sandia, in fact, is contractually obligated to do so, App. 37 -- and presumably they are themselves liable to the vendors. Vendors are not informed that the Government is the only party with an independent interest in the purchase, as was true in Kern-Limerick, and the Government disclaims any formal intention to denominate the contractors as purchasing agents. Similarly, Sandia and Zia need not obtain advance Government approval for each purchase. [ Footnote 17 ] These factors demonstrate that the contractors have a substantial independent role in making purchases, and that the identity of interests between the Government and the contractors is far from complete. As a result, sales to Zia and Sandia are, in neither a real nor a symbolic sense, sales to the "United States itself." It is true that title passes directly from the vendor to the Federal Government, but that factor alone cannot make the transaction a purchase by the United States, so long as the purchasing entity, in its role as a purchaser, is sufficiently distinct from the Government. Alabama v. King & Boozer, 314 U.S. at 314 U. S. 13 .
the Government and the contractors. See Brief for United States, O.T. 1951, Nos. 186 and 187, pp. 8-12. The Court held that, in the last sentence of § 9(b) of the Atomic Energy Act of 1946, 60 Stat. 76 -- which barred state or local taxation of AEC "activities" -- Congress had statutorily exempted the contractors from state taxation because the operations of management contractors were Commission activities. 342 U.S. at 342 U. S. 234 . Congress responded by repealing the last sentence of § 9(b), Pub.L. 262, 67 Stat. 575, in an attempt to "place the Commission and its activities on the same basis, with respect to immunity from State and local taxation, as other Federal agencies." S.Rep. No. 694, 83d Cong., 1st Sess., 3 (1953). In doing so, Congress endorsed the principle that
We do not suggest that the repeal of § 9(b) waives the Government's constitutional tax immunity; Congress intended AEC contractors to be shielded by constitutional immunity principles "as interpreted by the courts." S.Rep. No. 694 at 3. But it is worth remarking that DOE is asking us to establish as a constitutional rule something that it was unable to obtain statutorily from Congress. For the reasons set out above, we conclude that the contractors here are not protected by the Constitution's guarantee of federal supremacy. If political or economic considerations suggest that a broader immunity rule is appropriate, "[s]uch complex problems are ones which Congress is best qualified to resolve." United States v. City of Detroit, 355 U.S. at 355 U. S. 474 .
AEC management contracts were developed in an attempt to secure Government control over the production of fissionable materials, while making use of private industry's expertise and resources. See Carson v. Roane-Anderson Co., 342 U. S. 232 , 342 U. S. 234 -236 (1952); Tr. of Oral Arg. 4-6.
It is in the case last cited that Justice Holmes, in dissent, joined by Justice Brandeis and Justice Stone, countered the great Chief Justice's observation with other well-known words: "The power to tax is not the power to destroy while this Court sits." 277 U.S. at 277 U. S. 223 . Justice Frankfurter, concurring, in Graves v. New York ex rel. O'Keefe, 306 U. S. 466 , 306 U. S. 490 (1939), observed: "The web of unreality spun from Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmes' pen."
With the abandonment of the notion that the economic -- as opposed to the legal -- incidence of the tax is relevant, it becomes difficult to maintain that federal tax immunity is designed to insulate federal operations from the effects of state taxation. It remains true, of course, that state taxes on contractors are constitutionally invalid if they discriminate against the Federal Government or substantially interfere with its activities. See United States v. County of Fresno, 429 U. S. 452 , 429 U. S. 463 , n. 11, 429 U. S. 464 (1977); Moses Lake Homes, Inc. v. Grant County, 365 U. S. 744 (1961); City of Detroit v. Murray Corp., 355 U. S. 489 , 355 U. S. 495 (1958). New Mexico, however, is not discriminating here.
The New Mexico use tax under consideration here operates in precisely the same way. Both taxes, in terms, reach the use of property; both have the effect of serving as enforcement mechanisms for the state sales tax. Both serve to ensure that either the sale or the use of all property in the hands of non-immune entities will be taxed, no matter where the property is purchased. And both, in terms, tax the privilege of doing business in the State. See N.M.Stat.Ann. § 72-16A-4 (Supp.1975) (gross receipts tax imposed "[f]or the privilege of engaging in business"); § 72-16A-7, (use tax imposed "[f]or the privilege of using property"). In short, the two taxes have the same "practical operation and effect." City of Detroit v. Murray Corp., 355 U.S. at 355 U. S. 493 .
The Government argues that the tax here is supported by Livingston v. United States, 364 U. S. 281 (1960), aff'g 179 F.Supp. 9 (EDSC 1959). There, the Court summarily affirmed the District Court's invalidation of a state sales and use tax, as applied to the purchase and use of property by an AEC contractor. The District Court noted the "extraordinary" nature of the contract involved, id. at 16, finding that the contractor had entered into the agreement entirely as a "contribution to the defense effort." Id. at 17. The contractor received a one dollar fee, and otherwise operated "without hope of gain," id. at 17-18. The District Court found that the research conducted and experience gained by the contractor's employees were unlikely to benefit the corporation. Id. at 23. And the court found that the contractor acted "as the alter ego of the [Atomic Energy] Commission." Id. at 18. Boyd distinguished Livingston by confining it to its "extraordinary" facts, finding crucial "the factual determination that [the Livingston contractor] received no benefits from the contract." 378 U.S. at 378 U. S. 45 , n. 6. Livingston is inapplicable here for the same reasons. Zia and LACI, of course, receive fixed fees for their services. Sandia does not receive a cash fee, but it obtains obvious benefits from its contractual relationship with the United States. See supra at 455 U. S. 723 -724, and n. 3. There has been no suggestion -- let alone a finding below -- that Sandia and Western Electric entered into the contract for only altruistic reasons.
While a use tax may be valid only to the extent that it reaches the contractor's interest in Government-owned property, cf. City of Detroit v. Murray Corp., 355 U.S. at 355 U. S. 494 ; United States v. Colorado, 627 F.2d 217 (CA10 1980), summarily aff'd sub nom. Jefferson County v . United States, 450 U.S. 901 (1981), there has been no suggestion here that the contractors are being taxed beyond the value of their use.