Overhead expenses and indirect costs associated with property purchased for a U.S. government work contract were considered taxable because the manufacturer was the purchaser. It was argued that because the title of the indirect materials transferred directly to the government upon shipment by the vendor, the exemption should apply. However, the passing of the title had no bearing on the taxability under the Rhode Island sales and use tax act. In addition, the State’s view was that only two parties were involved, the vendors and the manufacturers. Therefore, the federal government was not involved in the transaction and consequently the exemption could not be passed through. (Administrative Hearing Decision No. 202-16, Rhode Island Division of Taxation, October 11, 2002)