On April 15, 1994, at 1610 mountain daylight time, a Bell 206L-3 helicopter, N937S, sustained substantial damage while executing an autorotation following an engine malfunction. The pilot and passenger were not injured. Visual meteorological conditions prevailed and no flight plan was filed for this local test flight. According to the pilot, control of the engine was lost during a test flight and the engine accelerated to maximum power. The pilot secured the engine and performed an autorotative landing. During the landing sequence, the main rotor came in contact with the tail pylon severing the tail rotor drive shaft. The test flight was being conducted due to installation of a fuel control/governor and the passenger (additional crew) was the mechanic who performed the work. The engine, fuel control, and engine governor were removed and sent to the manufacturer, Allied Signal, for further examination. Under direction from local FAA personnel, a functional test and visual examination was conducted. The examination and testing revealed no discrepancies. (The narrative portion of the Allied Signal report is attached. For the full report, contact Allied Signal for report number ECD422-AR64.) Following return of the parts to U. S. West, the aircraft owner, the fuel control and governor were sent to an independent testing laboratory. The results of their examination are attached and provide information that a foreign substance, described as a piece of abrasive paper, was found in the reset shaft housing of the governor. According to the report, under the operating conditions present at the time of the occurrence, if the reset rod sticks, fuel flow will increase.