Hughes Aircraft Co. v. County of Orange

This case concerns the assessment of ad valorem taxes by the County of Orange (County) against the personal property, including manufacturing supplies, expensed equipment and office space partitions, used by Hughes Aircraft Company (Hughes), a defense contractor, in the performance of government contracts. We are asked to determine whether title to such property passes to the United States Government (Government) in accordance with the Federal Acquisition Regulation (FAR), 48 Code of Federal Regulations part 52.232-16 (1998), with respect to fixed-price Government contracts with progress payments, and 48 Code of Federal Regulations part 52.245-5 (2001), with respect to cost-reimbursement Government contracts, such that, when in the possession of Hughes, the property is not subject to local taxation.

Facts

Hughes is a defense contractor, which has performed multiple and various contracts for different Government agencies. In connection with its operations, Hughes operated facilities within the County for the years 1989 through 1995. During that time, Hughes maintained more than 100 separate contracts with the Government for the design and fabrication of high-tech…