Opinion ID: 4531267
Heading Depth: 2
Heading Rank: 2

Heading: The FMS Transactions at Issue

Text: The facts of this case are largely stipulated. Lockheed Martin Corporation is a global security and aerospace company engaged in the research, design, development, manufacture, integration, and sustainment of advanced technological systems, products, and services. Lockheed Martin operates a manufacturing facility in Fort Worth, where it produces military aircraft for both the U.S. government and certain approved foreign governments. During the franchise-tax report years 2005 to 2007, Lockheed Martin delivered a number of F-16 fighter jets that it had developed and produced at that facility for the governments of Chile, Greece, Israel, Oman, and Poland. As required by the Arms Export Control Act, the sales of the F-16s were handled through the FMS program described above. Thus, each sale was effected through two contracts: one between Lockheed Martin and the U.S. government, and one (the LOA) between the U.S. government and the foreign buyer. The contracts between Lockheed Martin and the U.S. government identified the respective foreign buyers and called for the jets to be designed to the buyers’ specifications, including integrating certain equipment furnished by the foreign buyers. A Ferry Plan associated with each transaction “define[d] events, tasks, and personnel associated with the delivery of [the] aircraft from Lockheed Martin . . . to [the foreign buyer].” Transfer of legal title to each of the F-16s occurred at Lockheed Martin’s Fort Worth facility upon the execution of a Material Inspection and Receiving Report (DD250) by an authorized U.S. government representative. The executed DD250 signified the U.S. government’s “final acceptance of the aircraft . . . as meeting the 5 applicable contractual requirements.” Lockheed Martin was then authorized to request payment, which was made by the U.S. government “out of funds the foreign buyer ha[d] on deposit . . . or based upon a ‘dependable undertaking’ by that foreign government.” In the next step of the transaction, the U.S. government representative signed a Requisition and Invoice/Shipping Document (DD Form 1149) documenting transfer of possession and control of the aircraft to the U.S. government. 7 Another form, the Aerospace Vehicle Delivery Receipt (AFTO 290), documented the transfer of possession and control of the aircraft to a U.S. government pilot responsible for transporting it to the purchasing foreign government. A representative of that government countersigned the AFTO 290 upon final delivery of the aircraft. Pursuant to the Ferry Plan, Lockheed Martin retained certain obligations throughout the delivery process, such as providing “technical assistance” at intermediate locations and additional “on-site assistance and liaison support” at such locations as “necessary to allow uninterrupted delivery.”