Game of Carbines


TFB resident expert Daniel E. Watters has published an article for Defense Industry Daily about the US Army procurement of 70,000 to 100,000 additional M4 Carbines, what is means for Colt, who own the M4 design, and for other manufacturers.

Obviously, if Colt does not bid low enough, they cannot expect to win the contract. However, if Colt’s bid is significantly lower than their last contract price, they will find Congress, the GAO, and the DOD asking some uncomfortable questions as to why their previous prices were so much higher.




Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


Advertisement

  • jamieb

    What is a significant %?

    I would are the r&d and tooling are paid for and a higher new volume order lowers the unit cost.

    Its not war profiteering to make a modest % on your product. Colt makes less profit as a % of gross than many consumer goods manufacturers.

  • charles222

    Yeah, I don’t think we’ve had a single-contract buy this large recently, either. When you’re ordering three lots of 25,000, 65,000, and 100,000 rifles the price is going to drop alot because that is a metric asston of rifles.

  • Alaskan

    maybe Colt needs a government bailout..

  • SpudGun

    *Spudgun puts on tinfoil hat*

    I suspect that Colt and FN will go down the same route as the energy suppliers / communications providers / precious commodities brokers, by having secret meetings in hotel rooms and fixing a common price for their product.

    In exchange for forming a ‘cartel’, the spoils of this and future contracts could be shared out enriching both companies at the buyers’ expense. In an ideal free market system, the manufacturer who can create a comparable product at a cheaper price would win. Unfortunately, this is rarely the case.

    *takes off tinfoil hat*

  • http://www.thegunzone.com/556dw.html Daniel E. Watters

    At last check, FN Manufacturing was selling M16A4 for right around $740. So, I wouldn’t be shocked if the winning bid for the M4/M4A1 comes in under $800. I just can’t see Colt slicing their prices by 25% without eyebrows being raised.

    When I have time, I need to chart out the history of M4 contract prices.

  • JT

    But what gun would King Robert choose? lol

    This whole procurement game fascinates me. How do they manage to balance quality with speed of production and materials sourcing so that it meets some arbitrary figure their numbers guys came up with?

  • Lance

    Great article Mr. Watters great job.

    I find it very true that Remington USA and FN USA will give Colt a BIG run for its money to build more M-4s Remington back at Shot Show said they will build both M-4A1s and there own M-4 Gas Piston Carbine at much lower prices than both the Colt M-4 and there own ACR in price so Remington who already won the Sniper rifle competition (M2010) will be a major player in this.

    As per the ICC competition looks like its in trouble since the whole schedule is changed now to 2015 for the final competition to win and with the hyper-burst requirement I doubt any current competitor can really meet the Army’s new requirements.

    Face it the M-4 in some form or another will stay standard issue for many years to come.

  • http://federaleagent86.blogspot.com/ Federale

    I don’t think they care. They won the previous bid fair and square. So the price goes down with competition and scale production.

    No one, much less the DOD will care, much less be able to demand any refunds.

  • Matt G.

    They are not a government owned buisiness and can therefore charge whatever the hell they please. If the dod starts asking questions, tell them the truth, “we bid the price we thought you would pay, not the lowest we could afford, that’s called capitalism.”

  • Lance

    I think Remington will beat both Colt and FN since they are making the M-2010 and parts of the M-110 for the army already they make them alot cheaper than Colt or FN would.

  • Bill Lester

    Federale and Matt G. are right on the money. (pun intended)

  • Rijoenpial

    Hi guys!

    I think the tough questions will the why COLT was given preferential treatment, violating competition and market laws as well as weapon procurement laws! The USArmy is publicly funded, from the taxpayers themselves, so they will have some explaining to do as well! COLT’s role in this could be huge if it is discovered there were bribes involved! So, I think it would be in COLT’s best interest NOT to attract Congress attention!

    And trust me, the M4 Addendum is a clear violation of the competition and market laws! Kinda like what Microsoft did for decades and they got penalised for it! They got filthy rich from it, but they were penalised for it!

    So, the Congress would investigate not just COLT but the USArmy itself for allowing COLT to achieve the power it achieved to even BLACKMAIL the USArmy into accepting that ridiculous Addendum!

    I usually say that in a business where millions of dollars are involved, it is almost a certitude that some form of corruption, bribes and all sorts of financial crimes happen!

    Cheers!

  • Lance

    Its not all fixed Colt has as a military carbine maker all the stuff t make mill spec M-4A1s FN dose NOT currently niether dose Remington at the moment. Give time they will but right now Colt is the main maker of M-4s. Thats why they won so many times and for M-16s FN has won.

  • http://www.thegunzone.com/556dw.html Daniel E. Watters

    Lance: Colt got all of the previous M4 carbine contracts without competitive bidding. The crux of the “M4 Addendum” is that the Army gave up its rights to second source acquisition of the M4 for nearly a decade in return for Colt not withdrawing the Army’s license rights for the M16 rifle. It seemed like a good idea when the Army was still planning on issuing the M16 as standard, but it turned very sour when the Army decided to “pure fleet” on the M4 a few years later.

  • Lance

    @Daniel E. Watters

    You right about Colt in the past I ment present contracts for M-4A1s not previous M-4 contracts sorry. The Army dose have M-16A2s in service for about 40% of the service and will use them past 2015 but the new M-4A1s will be moving older M-4s to replace A2s after 2014.

  • http://www.thegunzone.com/556dw.html Daniel E. Watters

    Lance: The current M4 and M4A1 being built by Colt were ordered off of its final sole-source, multi-year contract awarded in Fiscal Year 2007. The ordering period for that contract closed at the end of Calendar Year 2010. Scheduled deliveries will continue through this year.

    Any additional orders for M4 and M4A1 carbines will be awarded through the open bid solicitation I mentioned in my article.

  • Lance

    I was talking about the new bid to make new M-4A1s not older M-4 contracts Daniel.

    Im saying Colt is better suited right now to make Carbines while FN is better suited to make full size rifles.