Ariz. Admin. Code § 15-2D-805
Sales of tangible personal property to the United States Government are not included in the numerator of the sales factor. For the purposes of this Section, only sales for which the United States Government makes direct payment to the seller under the terms of a contract constitute sales to the United States Government. Thus, as a general rule, sales by a subcontractor to a prime contractor, who has the contract with the United States Government, do not constitute sales to the United States Government.
Example 1: A taxpayer contracts with General Services Administration to deliver X number of trucks that are paid for by the United States Government. The sale is a sale to the United States Government.
Example 2: The taxpayer, as a subcontractor to a prime contractor with the National Aeronautics and Space Administration, contracts to build a component of a rocket for $1,000,000. The sale by the subcontractor to the prime contractor is not a sale to the United States Government.
Ariz. Admin. Code § R15-2D-805