In order to validate the proposed aircraft's design, and to explore its flight handling characteristics, Fairchild Republic contracted with Ames Industries of Bohemia, New York to build a flyable 62% scale version.

[5] The 1985 Gramm–Rudman–Hollings Balanced Budget Act mandated spending cuts for the US government in an attempt to limit the national debt,[5] and while testing did not reveal any major problems,[7] Secretary of the Air Force Russell A. Rourke cancelled procurement of the T-46, while allowing limited development to continue.

[5] While attempts were made in Congress to reinstate the program, which resulted in the FY 1987 budget being delayed, an amendment was passed to the 1987 Appropriations Bill to forbid any spending on the T-46 until further evaluation of the T-46 against the T-37 and other trainers took place.

Without any new contracts and the NGT program cancelled, the company closed the Republic factory in Farmingdale, New York, bringing 60 years of Fairchild aircraft manufacturing to an end.

The aircraft itself featured a side-by-side configuration, a twin (or "H") tail (similar to the company's A-10), ejection seats, pressurization, and two turbofan engines.