Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 210 - RETAIL SALES AND USE TAX › Section 23VAC10-210-693 - Government contractors

Current through Register Vol. 40, No. 24, July 15, 2024
A.
				Definitions. The following words and terms when used in this regulation shall
				have the following meanings, unless the context clearly indicates otherwise:
"Add-ons" mean additional obligations subsequent to the
				  execution of the original contract or order, including modifications to
				  contracts or orders.
"Classified contract" means a contract in which the
				  contractor or its employees must have access to classified information during
				  contract performance.
"Classified contract agent" means an auditor employed by the
				  department who has been authorized to review secure or classified
				  contracts.
"Contractor" means an entity that contracts to perform all or
				  a portion of a contract for a government entity. For purposes of this section,
				  the term contractor shall include a prime contractor, contractor,
				  subcontractor, or any other term conveying the same obligation, whether
				  incurred by contracting directly with the government entity or with another
				  contractor, to perform the work under the contract.
"Department" means the Virginia Department of
				  Taxation.
"Government" or "government entity" means the United States
				  government, the Commonwealth of Virginia, and any agency, board, commission,
				  political subdivision or instrumentality of the Commonwealth of Virginia. The
				  terms "government" and "government entity" do not include any foreign
				  governments, other state governments of the United States, or any political
				  subdivisions of such other state governments.
"Indeterminate purpose contract" means a contract in which
				  the sale of the tangible personal property or the provision of services is
				  dependent upon some future action of the purchaser for which the exact amount
				  of time and quantity cannot be determined at the time the contract is entered
				  into.
"Mixed contract" means a contract between a government entity
				  and a contractor that involves the contractor both rendering a service and
				  providing tangible personal property to the government entity under that
				  contract.
"Order" means a specific task assigned to a contractor
				  pursuant to a contract with a government entity. For purposes of this
				  regulation, the term "order" shall include, but not be limited to, task orders,
				  delivery orders, work orders, contract line item numbers (CLINs), and shall
				  also include orders issued under a subcontract for fulfillment of work or
				  products required under a general contractor's prime contract with the
				  government and add-ons to existing contracts or orders. The term "order" shall
				  not include a vendor order issued by a contractor to a vendor.
"Purchase for resale" means any tangible personal property or
				  taxable service purchased by a government contractor with the intent of resale
				  to a government agency and that is not used by the contractor for any purpose
				  that is inconsistent with holding the property for resale to the government.
				  "Purchase for resale" also includes tangible personal property to be
				  incorporated into a manufactured product, that will be sold to the government
				  entity.
"Real property contract" means a contract between a
				  contractor and a government entity in which the contractor contracts to perform
				  construction, reconstruction, installation, repair, or any other service with
				  respect to real estate, or fixtures thereon, including highways, and in
				  connection therewith, to furnish tangible personal property.
"Statement of work" means a description of work that must be
				  completed in order to fulfill a contractual obligation. A "statement of work"
				  may be for the provision of a service or the transfer of tangible personal
				  property, or both. A "statement of work" may be associated with the overall
				  purpose of a government contract, or may be a separate and distinct subordinate
				  activity under the overall purpose of a contract. A statement of work may be
				  included in a contract, or in an order, as defined herein.
"Subcontractor" means a contractor who contracts to perform
				  all or a portion of a general or prime contractor's contract with a government
				  entity. For purposes of this regulation, a subcontractor shall be deemed as
				  such regardless of how far removed the contractor is from the general or prime
				  contractor. A subcontractor may be referred to by any other term that conveys
				  the relationship at any tier between the contractor and the entity to perform
				  the work under the subcontract.
"True object test" means the method of determining whether a
				  particular transaction that involves both the rendering of a service and the
				  provision of tangible personal property constitutes the sale of a service or
				  the sale of tangible personal property.
"Vendor" means a person who is not a contractor or
				  subcontractor, and who transfers tangible personal property by sale.
"Vendor order" means a commercial document or form completed
				  by a contractor and issued to a vendor requesting that the vendor provide
				  certain tangible personal property only. For examples of vendor orders, see
				  subsection E of this section.
B. Treatment of mixed government contracts,
				contracts solely for the provision of services or solely for the provision of
				tangible personal property, and real property contracts. Where a transaction
				between a government entity and a contractor involves both the rendering of a
				service and the provision of tangible personal property, the transaction is
				deemed a mixed transaction, and the true object of the transaction must be
				examined to determine the taxability of the transaction.
However, where a transaction between a government entity and
				  a contractor is solely for the provision of tangible personal property, solely
				  for the provision of services, or constitutes a real property contract,
				  application of the true object test is not necessary.
Example 1: Contractor A enters into a transaction with the
				  federal government under which it must furnish personnel to staff a federal
				  government agency's human resources department. Under the terms of the
				  contract, Contractor A is not required to provide any equipment or supplies to
				  the government. Because the transaction is purely for the provision of
				  services, application of the true object test is not necessary. Contractor A
				  will be deemed the taxable user and consumer of all tangible personal property
				  used in performing its services.
Example 2: Contractor B enters into a transaction to purchase
				  a computer system for the federal government. The terms of the contract also
				  require that the contractor develop and oversee training, such that outside
				  assistance will not be required to assist government personnel in the operation
				  and maintenance of the computer system. Because the transaction is a mixed
				  transaction requiring Contractor B to provide services (training) as well as
				  tangible personal property (the computer system), application of the true
				  object test is necessary. The true object of the transaction is the provision
				  of a computer system, thus tangible personal property purchased or leased
				  pursuant to this contract can be purchased for resale exempt of the retail
				  sales and use tax.
C. True
				object test; generally. In order to determine whether a particular transaction
				that involves both the rendering of a service and the provision of tangible
				personal property constitutes a sale of a service or of tangible personal
				property, the true object of the transaction must be examined. The appropriate
				tax treatment of purchases of tangible personal property by persons who
				contract with the government or its political subdivisions is based upon
				whether the transaction is for the sale of tangible personal property (e.g., a
				computerized data retrieval system) or for the provision of an exempt service
				(e.g., real property facilities management). If a transaction is for the sale
				of tangible personal property, a contractor may purchase the tangible personal
				property exempt of the tax using a resale exemption certificate, Form ST-10.
				The tangible personal property may be resold to the government exempt of the
				tax.
However, if a transaction is for the provision of services,
				  the contractor is deemed to be the taxable user and consumer of all tangible
				  personal property used in performing its services, even though title to the
				  property provided may pass to the government or the contractor may be fully and
				  directly reimbursed by the government or both.
D. Tax treatment of government contracts
				executed prior to July 1, 2006. With respect to mixed contracts between
				government entities and contractors executed prior to July 1, 2006, the true
				object test shall be applied to the underlying contract without regard to the
				individual orders issued prior to July 1, 2006, in furtherance of the overall
				contract.
Example 3: Contractor A enters into an agreement with the
				  federal government to modernize a signal acquisition system to address advances
				  in signal interception and collection technology through the modification and
				  customization of existing software. The contract is executed on January 1,
				  2004. Pursuant to the contract, the federal government issues orders specifying
				  particular jobs under the umbrella of the contract. One order executed on
				  January 10, 2004, requires Contractor A to provide support for the modification
				  of government-owned software once it is customized. Using technical information
				  that describes target signals, the contractor is required to deliver code
				  modification, test the modification, and to make further modifications as
				  required. A second order executed on January 15, 2004, requires Contractor A to
				  acquire a computer workstation on which the modified software will be
				  installed. Because both the contract and orders were executed prior to July 1,
				  2006, the true object test is applied to the underlying contract, without
				  regard to the individual orders issued by the federal government in furtherance
				  of the underlying contract. The true object of the contract is the provision of
				  services related to a signal acquisition system, as the overall objective of
				  the federal government is for Contractor A to use its expertise to address
				  advances in signal interception and collection technology through the
				  modification and customization of existing software. Contractor A is deemed the
				  taxable user and consumer of all tangible personal property used in fulfilling
				  the terms of the contract.
Example 4: Contractor B enters into a contract with the
				  Commonwealth of Virginia on January 5, 2000, to implement a complete
				  computer-based Traffic Signal Management System, consisting of a digital,
				  computer based, networked, central system providing direct communications with
				  all intersections in the project area. A separate order executed on March 1,
				  2000, and issued pursuant to the contract requires Contractor B to furnish and
				  integrate the complete computerized system, including all necessary
				  communications equipment not provided by the local telephone company, central
				  computers and peripherals, software, and other incidentals required to properly
				  operate the system. An order executed on March 1, 2000, requires Contractor B
				  to provide systems documentation and end-user training and support. Because the
				  contracts and orders were entered into prior to July 1, 2006, the true object
				  test is applied to the underlying contract, without regard to the individual
				  orders issued in furtherance of the contract. Although Contractor B is
				  contractually required to perform systems integration, end-user training, and
				  support services, the true object of the contract is for the provision of a
				  fully operational and automated Traffic Signal Management system. The required
				  services are provided as part of the sale of the system. Therefore, the true
				  object of the contract is the provision of tangible personal property to the
				  Commonwealth of Virginia. Tangible personal property purchased or leased by
				  Contractor B, the title to which passes to the Commonwealth, may be purchased
				  exempt from the Virginia sales tax using resale exemption certificates.
Example 5: Contractor C enters into a contract with the
				  federal government on June 30, 2005, to replace two antennas on a combat tank.
				  A separate order issued on July 5, 2006, pursuant to the contract calls for
				  integration and calibration of the two antennas. Although the contract was
				  executed prior to July 1, 2006, the true object test will be applied to the
				  separate order issued on July 5, 2006, as that order was issued on or after
				  July 1, 2006, and therefore, falls under the new true object test policy
				  effective July 1, 2006. The true object of the separate order is the provision
				  of a service and Contractor C is deemed the taxable user and consumer of all
				  tangible personal property used in providing those services.
With respect to indeterminate purpose contracts and basic
				  ordering agreements executed prior to July 1, 2006, the true object test shall
				  be applied to each individual order. If the true object of the individual order
				  constitutes a sale of tangible personal property, the sale is treated as an
				  exempt sale for resale to a government entity. The contractor may purchase
				  tangible personal property exempt of tax as a sale for resale using a resale
				  exemption certificate. If the true object of the individual order is the
				  provision of a tax-exempt service, the contractor is the user and consumer of
				  all tangible personal property used in providing the service as well as all
				  tangible personal property that is transferred to the government entity.
Example 6: Contractor D enters into an indeterminate purpose
				  contract with a government entity on January 1, 2005. The contract includes
				  hourly rates for various labor categories and specifies that all supplies and
				  services will be ordered by individual orders. On March 1, 2005, the government
				  entity issues a task order requiring Contractor D to provide 40 hours of system
				  evaluation services. On April 1, 2005, the government entity issues a task
				  order requiring Contractor D to provide 20 licenses for a Commercial Off the
				  Shelf (COTS) software package. The true object test would be applied to the
				  March 1 and April 1 task orders independently. Thus, the March 1 order is an
				  order for services, and the April 1 order is an order for tangible personal
				  property.
E. Tax treatment
				of orders executed on and after July 1, 2006. As of July 1, 2006, the
				application of the sales and use tax to all mixed contracts and indeterminate
				purpose contracts shall be based on application of the true object test to each
				individual order and not the original contract. If the true object of an order
				is the provision of a service, the government contractor is deemed the user and
				consumer of all tangible personal property used in providing the service. If
				the true object of the order is the sale of tangible personal property,
				tangible personal property purchased by the contractor to fulfill that order,
				even if not expressly identified by the terms of the order itself, may be
				purchased exempt of the tax, provided the property can be tied back to the
				order for resale. For add-ons to government contracts executed on or after July
				1, 2006, the true object test will be applied to each separate add-on without
				regard to the true object of the original contract. This amended treatment of
				orders executed on and after July 1, 2006, shall not apply to vendor orders as
				defined in subsection A of this section.
Example 7: Contractor A enters into a ship outfitting
				  contract with the U.S. Navy. A task order is issued to Subcontractor B to
				  obtain safety equipment. Subcontractor B submits an order to Vendor C for the
				  provision of unmodified lifejackets. The order submitted to Vendor C
				  constitutes a vendor order, as defined in subsection A of this section. As
				  such, the true object test does not apply to the vendor order. Instead,
				  Subcontractor B must apply the true object test at the task order level to
				  determine whether items purchased in furtherance of fulfilling that task order
				  are subject to the retail sales and use tax.
Example 8: Contractor A enters into a facilities management
				  contract with a state agency to include the provision of trash bags. Contractor
				  A issues a task order to Subcontractor B to provide trash removal services.
				  Subcontractor B submits an order to Vendor C for a large quantity of trash bags
				  to fulfill the order. The order submitted to Vendor C constitutes a vendor
				  order, as defined in subsection A of this section. As such, the true object
				  test should be applied at the task order level, rather than to the vendor
				  order. Because the task order constitutes an order for the provision of
				  services, Subcontractor B must pay retail sales tax on the purchase of the
				  trash bags.
Example 9: Contractor A enters into a contract with the
				  federal government on January 1, 2007, to design and provide a turn-key
				  integrated computer hardware and software system. The contract is divided into
				  separate orders. Order 1 requires that Contractor A design the integrated
				  system. Order 2 requires Contractor A to test and evaluate potential hardware
				  and software components of the integrated system. Order 3 requires that
				  Contractor A provide and deliver the integrated system. Order 4 requires that
				  Contractor A maintain the system, including performing all necessary functions
				  to keep the computerized system up and running, for a period of five years
				  following delivery. The true object of Order 1 is the provision of services, as
				  it requires Contractor A to design the integrated supply system. The true
				  object of Order 2 is the provision of services, as it requires Contractor A to
				  perform the functions of testing and evaluation. As such, Contractor A is
				  deemed the taxable user and consumer of all tangible personal property used in
				  fulfilling Orders 1 and 2. The true object of Order 3 is the provision of
				  tangible personal property. The true object of Order 4 is the provision of
				  tangible personal property. As such, Contractor A may purchase items to fulfill
				  Orders 3 and 4 exempt of the tax as purchases for resale. Contractor A
				  purchases servers, routers, disk arrays processors and software to fulfill
				  Order 3. Contractor A's cost accounting records clearly differentiate purchases
				  among the four separate orders. Although the terms of Order 3 only discuss a
				  "turn-key computerized system" generally and do not identify the specific parts
				  constituting that system, Contractor A's purchases of the servers, routers,
				  disk arrays, processors, and software can be tied back to Order 3.
Example 10: Contractor A enters into a contract with an
				  agency of the Commonwealth of Virginia on March 1, 2006, for the purchase and
				  installation of a telecommunications system in Virginia. The government entity
				  issues a separate order on August 1, 2006, requiring that Contractor A provide
				  installation services. Because the separate order is issued after July 1, 2006,
				  the true object test is applied to the separate order, rather than the
				  underlying contract. The true object of the order is the provision of services.
				  Contractor A is deemed the taxable user and consumer of all tangible personal
				  property used in performing these services.
Example 11: Contractor D executes a contract with the federal
				  government on March 1, 2010, for the construction of a ship. The provisions of
				  the contract contain a separate order (Order 1) that calls for engineering
				  studies and design. An additional order (Order 2) mandates that Contractor D
				  obtain steel and components, which will later become affixed to the ship. The
				  true object of Order 1 is the provision of services, including engineering
				  studies and design. As such, Contractor D is deemed the taxable user and
				  consumer of all tangible personal property purchased in fulfilling Order 1. The
				  true object of Order 2 is the provision of tangible personal property to be
				  incorporated into a manufactured product sold to the government. As such,
				  Contractor D can purchase the steel and components exempt of the tax for
				  resale.
F. Transitional
				provisions for orders entered into prior to July 1, 2006. The true object test
				shall be applied to all orders issued under all mixed government contracts if
				executed on and after July 1, 2006, regardless of the date on which the
				original contract, add-on, or order was executed.
Example 12: Contractor B enters into a contract with a
				  government entity on January 1, 2004. The contract requires Contractor B to
				  sell and install a computer system to the government entity; therefore, the
				  underlying true object of the contract is the sale of tangible personal
				  property to the government entity. The contract is to be fulfilled by
				  Contractor B over a five-year period with the final phase of the contract
				  completed on or before December 31, 2008. From January 1, 2004, through June
				  30, 2006, all aspects of the contract will be treated as exempt sales of the
				  tangible personal property to the government entity. Beginning July 1, 2006,
				  the tax will be applied based on the true object of each individual order and
				  taxed accordingly. Therefore, on and after July 1, 2006, if the true object of
				  an order is the provision of a service, Contractor B will be liable for sales
				  and use tax on all tangible personal property used in providing the service,
				  even if the tangible personal property is eventually transferred to the
				  government entity.
Example 13: Contractor C enters into a contract with a
				  government entity on June 1, 2005. The underlying true object of the contract
				  is the provision of janitorial services for a five-year period ending May 31,
				  2010. From June 1, 2005, through June 30, 2006, Contractor C will be the
				  taxable user and consumer of all tangible personal property purchased for use
				  in fulfilling the service contract. For all orders executed on and after July
				  1, 2006, the contractor will apply the true object test to each separate order.
				  In orders for the sale of tangible personal property to the government,
				  purchases under the order will be exempt, provided there is not a taxable
				  interim use of the tangible personal property by the contractor prior to its
				  sale to the government. In orders for the provision of a service, the
				  contractor will be liable for the tax as user and consumer for purchases made
				  pursuant to the order.
G.
				Interim use. If a contractor makes an interim use of tangible personal property
				held for resale to a government entity pursuant to an order for the purchase of
				tangible personal property, the use will constitute taxable interim use
				provided that the terms of the order in question call for the operation of the
				tangible personal property by the contractor and that operation is inconsistent
				with the holding of that property for resale.
However, if a contractor makes an interim use of tangible
				  personal property held for resale to a government entity pursuant to an order,
				  the use will constitute an exempt interim use if the terms of the order in
				  question call for the operation of the tangible personal property and that
				  operation is consistent with the holding of that property for resale.
In most instances, the testing and approval of tangible
				  personal property prior to its transfer to the government entity will
				  constitute exempt interim use. Likewise, a sale that is contingent upon the
				  demonstrated successful operation of tangible personal property purchased under
				  the order will be exempt of the retail sales and use tax.
Example 14: Contractor A enters into a contract with a state
				  government agency after July 1, 2006, to provide and maintain computer systems,
				  including hardware and software to that agency. A task order issued pursuant to
				  the contract requires Contractor A to design a software package to be
				  distributed to the state government agency. Under the terms of the order,
				  Contractor A must provide a training session for the duration of one week to
				  government agency employees on the use of this computer software package.
				  Employees of the government agency visit Contractor A's facilities for a
				  "hands-on" training session, at which Contractor A uses the actual software it
				  will send to the government agency. After training is completed, Contractor A
				  repackages the software and ships it by common carrier to the government
				  agency. Because Contractor A's use of the computers is integral to the sale of
				  computer systems to the state government and because the use is consistent with
				  the resale, the use is insufficient to destroy the resale status of the
				  transaction. Contractor A has made an exempt "interim use" of the software,
				  prior to shipping it to the government agency. Contractor A's purchase of the
				  software is exempt.
Example 15: Contractor B enters into a contract with a state
				  agency on January 1, 2007, to acquire and furnish equipment and materials that
				  are elements and parts of a computerized Traffic Management System. The system
				  would provide computerized highway surveillance and control for highways in the
				  state of Virginia. Under the provisions of the contract, Contractor B is
				  required to provide documentation and training services on the new system to
				  the state agency's employees. A separate order requires that Contractor B
				  provide computers as components of the system, and contains a provision
				  providing that the sale of such computers to the state agency is contingent
				  upon Contractor B's ability to demonstrate the successful operation of the
				  computers for a two-year period. Because the sale is contingent upon the
				  successful operation of the computers for a two-year period, such use
				  constitutes exempt interim use, and the computers can be purchased exempt of
				  the retail sales and use tax.
Example 16: Contractor C enters into a mixed contract with a
				  state agency on January 1, 2007. Order 1 under the contract requires Contractor
				  C to operate and maintain the state's Hazardous Waste Accumulation Facility.
				  Order 2 of the contract requires Contractor C to provide containers to the
				  state agency. Contractor C uses the containers to fulfill another contract
				  before passing the containers over to the state government. Contractor C's use
				  of the containers to fulfill an outside contract, prior to passing these
				  containers on to the state agency constitutes use that is inconsistent with the
				  holding of that property for resale. This use is sufficient to destroy the
				  resale status of the containers. Contractor C will be subject to tax on the
				  purchase of these containers.
Example 17: Contractor D enters into a contract with a
				  government entity to provide floor-cleaning services. The government entity
				  issues an order to Contractor C for the purchase of mops and a separate task
				  order for the provision of floor-cleaning services. Although Contractor C will
				  use these mops to fulfill the service contract with the government entity,
				  Contractor C's purchase of the mops under the individual order will be exempt
				  from tax as a sale for resale. Contractor D's use of the mops does not
				  constitute "taxable interim use" because this use was not directed under the
				  individual order for the purchase of mops. Thus, Contractor D may purchase
				  these mops exempt of the retail sales and use tax.
H. Real property contracts with government
				entities. If a contractor contracts with a governmental entity to perform
				construction or reconstruction with respect to real property, and in connection
				with this real property contract, agrees to furnish tangible personal property
				for use in real estate construction, the contractor shall be deemed to have
				purchased this tangible personal property for use and consumption and shall be
				liable for the sales and use tax on this tangible personal property.
Nothing in this regulation shall be construed to authorize
				  the application of the true object test to real property contracts with
				  government entities. A real property contractor is taxed on the cost price of
				  any construction or installation supplies used or consumed in the performance
				  of real property construction, installation or repair, regardless of whether
				  the true object of the contract or order is for services or the sale of
				  tangible personal property. Construction and installation supplies shall
				  include, but not be limited to, structural steel, concrete, conduit, wiring,
				  cabling, nuts, bolts, anchors, screws, nails, glue and other materials used or
				  consumed by a government contractor in fulfilling a contract with any
				  government entity. Nothing in this regulation shall be construed to exempt from
				  the retail sales and use tax materials, equipment, or other tangible personal
				  property purchased by a contractor for use in real property construction
				  contracts with a government entity, regardless of whether title to such
				  property passes directly to the government entity upon purchase by the
				  contractor or if the contractor is reimbursed directly by the government entity
				  for the cost of such property.
The modified application of the true object test to
				  individual orders will not apply to contracts with a government entity to
				  perform construction or reconstruction with respect to real property. For more
				  information on real property construction contracts with government entities,
				  see 23VAC10-210-410.
I. Subcontractor activities.
1. Generally. For purposes of this section, a
				subcontractor to a prime contractor with a government entity shall be granted
				the same tax treatment as the prime contractor when fulfilling its contractual
				obligations to the prime contractor. Thus, a subcontractor shall apply the true
				object test to the overall purpose of the subcontract, unless it contains
				individual orders that were executed on or after July 1, 2006, in which case
				the subcontractor must apply the true object test to each separate order to
				determine the tax application.
Example 18: General Contractor A enters into a contract with
				  the federal government, under which General Contractor A will furnish, install
				  and maintain a telecommunications system. General Contractor A furnishes the
				  system and subcontracts with Subcontractor 1 to install the system and
				  Subcontractor 2 to provide maintenance and repair services. Order 1 is issued
				  to General Contractor A for the provision of the telecommunications system,
				  Order 2 is issued to Subcontractor 1 to install the system and Orders 3 and 4
				  are issued to Subcontractor 2 to provide the maintenance and repair services.
				  General Contractor A, Subcontractor 1 and Subcontractor 2 may apply the true
				  object test to each separate order to determine the tax application of each
				  separate order.
2.
				Subcontractor recordkeeping requirements. Every subcontractor under a
				subcontract that is in furtherance of a government contract will be required to
				maintain suitable records and documentation in order to accurately determine
				the true object of an order entered into in furtherance of a contract between a
				prime contractor and a government entity. If the subcontractor determines that
				the true object of an order is the provision of tangible personal property, the
				subcontractor must present an ST-10 resale exemption certificate in order to
				purchase the property exempt of the retail sales and use tax. Every
				subcontractor will be required to present an ST-10 resale exemption certificate
				for all such exempt transactions, regardless of how far removed the contractor
				is from the general contractor. If a prime contractor issues an order to a
				subcontractor in furtherance of a government contract, the prime contractor
				shall provide the subcontractor a task order number, a copy of the task order
				and the name of the government agency or other such documentation that would
				allow the subcontractor to prove that the order is in furtherance of a
				government contract.
Example 19: Contractor A enters into a contract with a state
				  agency for the development of a computer system, which requires Contractor A to
				  furnish computers to the state agency. The state agency issues a task order for
				  the provision of computers. The prime contractor issues a task order to
				  Subcontractor 1, who issues a task order to Subcontractor 2 to provide the
				  computers. Subcontractor 2 will be required to present the vendor with an ST-10
				  resale exemption certificate. Subcontractor 1 will be required to present an
				  ST-10 resale exemption certificate to Subcontractor 2. The general contractor
				  will be required to present Subcontractor 1 with an ST-10 resale exemption
				  certificate. The state agency will be required to present to the prime
				  contractor an ST-12 government exemption certificate.