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M16A4 rifles, c Nick Leghorn

Colt has been teetering on the brink of disaster. They recently filed for bankruptcy, and they have been frantically trying to cut their losses while preserving their executives’ golden parachutes. Colt had been relying on military contracts to carry their balance sheet after ignoring the civilian market for decades, but when FN Manufacturing came along and snagged the contract from Colt (under-bidding and out-performing the old prancing pony) the last cash cow for Colt finally keeled over. Word comes today that the Army has re-awarded the M4 and M4A1 contract to both FNM and Colt, and some media outlets have jumped on this as a “new” thing that might save Colt. Here’s the thing: it really isn’t . . .

The Army does not own the M4. The US Government does not own the M4. FN Manufacturing does not own the M4. So who does? Colt.

The prancing pony owns and retains control of the technical data package (TDP), and every single firearm manufactured from that TDP requires some royalties to be paid to Colt. Unless the Army wants to transition to a new firearm (which they are trying to do, but very slowly) then the Army M4 contract needs to include Colt on the paperwork as it’s their design that is being produced.

However, if you take a look at the wording of the contract award statement you might notice something interesting.

Colt Defense LLC, West Hartford, Connecticut (15QKN-15-D-0102); and FN America LLC, Columbia, South Carolina (W15QKN-15-D-0072), were awarded a $212,000,000 firm-fixed-price multi-year contract for M4 and M4A1 carbines for the Army and others, with an estimated completion date of Sept. 24, 2020.  Bids were solicited via the Internet with six received.  Funding and work location will be determined with each order. Army Contracting Command, Picatinny Arsenal, New Jersey, is the contracting activity.

There’s one phrase in there that really says what’s going on: “Funding and work location will be determined with each order.” Colt retains top billing on the contract (because it’s their design, remember?) but FN Manufacturing is also listed. That little sentence I highlighted allows the government to choose which facility does the actual manufacturing, and pay them accordingly.

In short, while Colt is on the contract (and despite what some other gun news outlets are saying) they still aren’t getting the work. What they do get is a small chunk of royalties on each firearm. It’s something, but it isn’t enough to keep Colt afloat.

They’re sitting at the end of a long table watching other manufacturers gorging themselves with work and trying to hoover up the crumbs that slip through. That’s not sustainable in the long run.

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  1. So, when I order a Bushmaster or AAC, whatever, does Colt get a cut? I guess I’m kinda missing this, otherwise, what is unique about an M4, that Colt has dibbies on?

    • I am not 100% sure, but I believe Colt only owns the rights on government use, so they only get royalties on the units the Federal government, or perhaps just the DoD purchase.

    • I’m going to go ahead and say from knowing some smaller manufacturers: No.

      What civ mfrs are selling is not an “M4”, and what Colt (and other contractors) are providing is in fact mil-spec, not meaning that it ‘matches mil spec’, but it *is a military specification*.

      Since Colt, (as far as I know) was instrumental in developing that specification, their name remains primary on it.

      • What exactly is the nature of the IP here? Colt would obviously hold copyright to such specs, and that would still be in force, but copyright only protects redistribution of the spec itself, not someone making an actual item to it. Patents? I would expect them to have expired by now. What else?

        • I think that this has to do with the original contracts between Colt and the US Gov’t. It’s not a patent issue.

        • I don’t know much about patent law, but it might be possible that the patent is still in effect. The M4 dates back to 1994 and I think a patent is good for 25-30 years (I am not sure at all though).

        • Patents last 20 years from the filing date of the earliest patent application. For those issued before 1995 (which should be the case for M4), they lasted either 20 years from filing, or 17 years from issue, whichever is longer. Either way, given that M4 was already in service in 1994, it should have expired by now.

          As others have pointed out, it’s probably more likely that this is a specific contract term between Colt and USG from way back. Or maybe not even that much back; reading up on it, Army has apparently obtained all rights to M4 technical data package from Colt in 2009. It might have been a condition on that deal that Colt will keep getting fixed-sum payouts for any actual manufacturers for a longer duration.

        • Utility patent prior to 1995 – 17 years. Post 1995 – 20 years.
          Design patent 14 years.

          That relic plastic popgun was designed and built in 1958-59. The only “rights” Colt owns are current “updates” (new carb for the model “T” sir?), and those granted by the military industrial complex. Anyone can clone it (non auto ‘natch) and as long as you don’t call it a Colt, you owe them bupkus.

  2. Politics, face it. Dems in congress forces Army to buy from the liberal NE to appease the Unions who keep giving them there jobs. Republicans own South Carolina and FN Mfg is there pet pony (Pardon the pun). So both make a deal with the DOD cash flowing to there states.

    Don’t matter both make good and overpriced rifle/carbines.

  3. The way i interpret that for for Colt is its still a big win. Its not uncommon for manufacturing firms to thrive on 3% margins after expenses, taxes etc.

    That being said, this is practically free money for them since theyre not actually having to manufacture anything and it can really float them well.

  4. Yes Nick I think you covered story a lot better than what being questionable report over at the firearms blog on this story. You explain better what going with this story better than they did. I would call win for Colt with all debt collected. Unless makes some changes Colt still gone bleed away any money makes from this event.

  5. If Colt goes under I won’t miss it. People like to think that it’s the same company that made the Dragoon or Single Action Army and it only is in name only. The company evolved from revolutionary designs invented by Sam Colt, continued to produce great double action in the 1900’s, and then became a part of the military-industrial complex.

    This Colt is not the Colt of old and gets too much admiration for the work better men did over a century ago

  6. Everything else aside it doesn’t say a lot of good things about Colt that the only way they can survive is by landing giant back door deal laden contracts to keep them going.

    • Well, it’s what they’re used to…

      I think it’s unfortunate that this is what they were seeking (another ‘sweet gov contract’) vs appealing to the public, but i’m guessing that decision has been rather final for a while now in upper management.

      • But it does make sense this is what they where looking for. For the mass market there are so many companies already putting out great rifles. Colt I can’t see having a chance trying to compete with that kind of competition.

        The question is simple has anyone bother to buy a colt in the last decade. I know I have not with way better companies manufacturing better than what colt is doing even now.

  7. I don’t think it will save Colt but it will make the rights to the M4 more valuable in the bankruptcy. Colt didn’t learn the lesson most of us learn early in life when we were told to not put all of our eggs in one basket. This is especially important when the basket is the politically motivated and fickle government.

    I won’t miss them.

  8. Colt needs to sell there proprietary rights to the M16/M4 and get back to producing quality civilian firearms to include the legendary Colt revolvers. And any profits they realize should all be spent on R&D to come with something revolutionary.

    This should be accomplished immediately after the wholesale termination of all the senior management morons that destroyed a great legendary historic company.

    • The company did 15 years ago when it left the consumer market and the decisions back then (by a different leadership team) have put Colt where it is today. No one wants to buy Colt products. There’s no compelling reason to buy a new Colt. I know, I know… If only they made the snake guns again – right? That’s not going to happen. Those were hand fitted guns and anyone who made them is long since retired. A restart of that name would only be a mass produced version at a wicked high price geared towards duping suckers who think they are buying one that’s the same as the originals. If you want a custom hand fitted gun there are far better options available today.

      The best thing that happens is Colt is liquidated and the name is sold to someone who will reband Turkish Caniks as Colts. It will be like the new Springfield Armory.

      • No, they couldn’t bring back the Python, but they probably could try to compete and innovate to appeal to the civ market nonetheless.

        S&W has stayed relevant, there’s no reason Colt couldn’t have except for laurel-resting.

        • Well there was the colt American something or other pistol. Seems like a solid design by Stoner and friends that colt lawyers ruined. If they still have the I.P. for that they could start making a good pistol with a novel action tomorrow.

          I’m not an expert in Colt’s failings but it seems like their problems run deeper than bad decisions to a bad corporate culture and mindset that prevents learning from mistsakes almost entirely.

    • Anyone who wanted to do so could build a Python-quality revolver.

      The reason why they won’t isn’t any IP issue. It is the price that the manufacture would need to charge in order to make a profit. They would need to hire a bunch of experienced gunsmiths in order to do the hand-fitting, polishing and testing.

      Want to get an idea of where these prices start? Look at Freedom Arms’ revolver prices. About $2700, and that’s just for brushed stainless steel. Add some more money for doing the double action fitting that isn’t required on a Colt SAA clone-ish revolver and the blueing that made the Python famous.

      I’d put out an estimate of $2500 as a starting point for a Python several months ago on TTAG. I’d now think that’s a low-end estimate.

      • Economy of scale might well bring price down below $1800 or so, similar to Smith Performance Center rigs, but really do not think a revolver line would be enough to carry a significant sized company (my guess is Freedom is not producing/selling dozens of units each day). Most of us might buy one or two nice revolves in our life’s, but not as ubiquitous as semi-auto pistols, given we can purchase 15+ round pistols for less money which takes the same room on a belt as a 7 shot $1500 revolver. That said, I love my smith PC 627’s (8 shot), and would not pay $2500+ for a Python, of which 100k’s were produced.

        • I don’t think revolvers are the answer, regardless of price. I love cars and trucks with manual transmissions and I love revolvers but I think they are both dropping to a small share market with some manufacturers dropping them altogether. I have revolvers because the TV shows and movies in my younger days had them as well as lever action rifles. The only semi-automatics we saw in the movies were the 1911 in war pictures. The prime buyers of today grew up with semi-automatic weapons featured in the TV shows and movies they watched.

        • For most folks (that I know anyway) revolvers have been a novelty item for the last 40+ years. Out of the few hundred pistols to have come and gone since the late ’70s, there’s been maybe 10 revolvers through my collection. I currently have only 2.

          It’s just such a niche piece, and not what the younger crowd thinks of when they think “handgun”. Everybody should have one or two, but right or wrong, the revolver is a carburetor. It kinda works, but it’s long since been replaced by EFI and there’s no going back.

        • I think it’s not entirely correct. I mean, yes, revolvers are very niche, but I wouldn’t say that they’re vintage the way carburetors are. Just look at Ruger LCR – there’s nothing vintage about it, it’s a modern design and has no qualms about being perceived as such.

          So the niche is compact, low-maintenance, low-training defense handgun.

        • int19h, Fair enough, it’s not a carb, carbs are completely useless other than as paperweights, there is still some functionality in a wheelgun.

          Don’t get me wrong, I don’t hate them, I’ve owned them and still do. I guess it’s that by the time I was a shooting kid in the ’70s, they were kind of a novelty. Even my grandpa went semi-auto everything in the ’20s and the aircraft engineering types I was shooting ISPC with in the late ’70s all shot auto-guns. Everybody had a few old revolvers, but they were show-off or nostalgia pieces. The only guys who still actually carried them were security guards, or backwards depts that didn’t let coppers pick their sidearm.

          In practical terms it’s just too heavy to carry an effective one (for me anyway at 6′ 190 I can’t hide one). .357 Mag ballistics are impressive, till you launch that pill from a 2 inch tube, then it’s less than impressive. And you only get 5/6 chances. For the same weight, I get at least 5, and generally 10+ more chances to hit my target. With a much more concealable profile, and delivered energy out of a longer barrel.

          I agree you don’t want to give something finicky like a Glock to noob who may not iron-wrist it at a critical moment. But I do know they can readily mag-dump 17 rounds out of a Star 30M, which I think is better odds. YMMV.

        • For most realistic self-defense scenarios, you simply won’t have the time to dump all 17 rounds from your mag, or even 10 for that matter. In fact, you’ll be lucky (or unlucky, depending on how you look at it) to even have enough time to unload all from a wheelgun. Remember, we’re talking about distances of under 10 yards here, and the target is advancing at you…

          .357 ballistics is still pretty impressive out of a 2″ barrel, actually. Don’t forget that for revolvers, cylinder doesn’t count as part of barrel length, while for pistols the chamber does. Yes, there is a cylinder gap, but still. We’re talking about 300 ft lbs out of a 2″ barrel, which is on par with what you get from a 4″ handgun with non-+P 9mm. You can get more with +P, sure, but you can also get more with .357 with hotter loads.

          As far as weight goes, I would also disagree. The traditional steel framed revolvers are bulky, but modern alloy frames are as light or lighter than pistols. LCR in .357 Mag is 17 oz, in .38 Special – 13.5 oz. And if you’re willing to put down ~$1K, there’s S&W 340PD, the ultimate in concealed firepower: a mere 11.5 oz, yet chambered in .357 Mag.

          Recoil is another thing entirely tho. I actually have 340PD, and it’s my primary carry piece for hikes and such, where I am more likely to need to deal with aggressive wildlife than with human attackers. For that purpose, I use Lehigh Xtreme Penetrator rounds in it. It should work wonderfully, but the kick of .357 in such a light package is… I don’t even have the word to describe that. It hurts more than any other handgun I’ve ever shot, and that includes my .454 Casull Ruger. For city carry, I’d definitely chamber .38 in it, and would recommend the same to any newbie.

          The reason why I call a revolver snubbie a good low-skill self-defense gun is fairly simple: it is “point and shoot” (no safeties to muck around with, consistent trigger pull that’s also heavy so it’s very hard to discharge it unintentionally), it doesn’t have any malfunctions that require training to clear, and it’s very tolerant to rare and even non-existent maintenance schedule, in a way that no semi-auto can be. It will also shoot any ammo that you throw at it, so long as it ignites. In that sense, the number of concepts the user has to learn is very low, which is perfect for people who really just want it as a tool that they are not going to practice with a lot, and don’t find pleasure tinkering with.

        • Agreed that one seldom does discharge more than a few rounds (hopefully none!). But some scenarios call for it, it does happen, and I like having the option of 15+ rounds in one load. My main point with that was that while I wouldn’t give a noob a Glock, I would train them on a heavier wondernine right after the .22 it’s been successful for me dozens of times – YMMV. As to muzzle energy, .357 out of a 2″ is right at 300# in the best loads. 9MM out of a 4″ barrel is at least 300# and the better loads push 400# – barrel length is absolutely critical up to at least 18″ on a pistol.

          I actually have fired light/ultralight stubbies in major calibers – as you noted the recoil is, well, unpleasant. Which is exactly why I don’t see it as a solution set, especially for a noob. I had a woman drop my Dan Wesson .357 with the 2 1/2″ (iirc) on the first shot. She had been (accurately) shooting 9mm and .45ACP for a few hundred rounds that day. Last thing I want is someone being tossed a gun that they can’t possibly fire more than once.

          I understand Corbon and Casull big wheelguns, with long barrels for wilderness use. I even understand pocket .22 revolvers as a last resort. Like many things in life, if it works for you then it very well may be the best tool for you. To me, the wheel gun just comes up short scientifically compared to any one of hundreds of semi-autos. YMMV

  9. Probably don’t know what I’m talking about, but I, as a Colt exec, would find some quality pistol smiths with that money and pay them to build Pythons and the like again. At least starting production again would gain them some preorder money and they might be able to get out of the hole. Maybe I’m wrong, but their current model for company policy isn’t working, and they should start finding out what the people want, and deliver.

  10. Sadly to say I have a Colt Python and it’s a great .357/.38. I should have bought two of them; one being a collectible. Jeez! Always watch your six, be careful out there.

    • Do any of the big companies want anything Colt has, if they really have been coasting for 20+ years what’s in the patent bucket to care about?

      The name still has a place in the American heart but it’s a nostalgic one, the other big companies that aren’t about to fold may not have that, but they do have overall good will and products that sell.

      Maybe a Chinese company X87BG or whatever they used to name state owned companies will buy the name, produce mediocrity with the odd gem and if the Chinese are feeling generous keep a few jobs here. Sadly might be Colt’s best bet to exist as anything other than a fond memory.

  11. The TDP and contracting process for a rifle that’s already been in service for 50 years is a result of the national armory system having been killed off by JFK’s SecDef, one Robert Strange McNamara.

    If we still had the national armory system, there would be no TDP, Colt would probably have never gotten as fat and lazy as they did on a wired-in government contract. And other companies that wanted to produce the M4/M16 on contract would not have to pay a IP fee or license.

    • I thought that the JFK administration and other military industrial interested groups bypassed and killed the National Armory System because ti was not progressive enough and produced the conservative M-14.

      • The M-14 wasn’t the first “lemon” the national armory system produced. It also produced the Garand, the Springfield 1903, the BAR, and a bunch of other good small arms.

        If we still had the armory system, we wouldn’t have the amount of money being spent on a “successor” to the M-16/M4. It would be just get developed, and then production contracted out to a company to execute the accepted design. The intellectual property would remain in the hands of the US government. eg, if today, you wish to make a 1911, you make a 1911. You owe no one a dime. Same deal on a 1903, BAR or Garand.

        • The M-14 wasn’t the first “lemon” the national armory system produced. It also produced the Garand, the Springfield 1903, the BAR, and a bunch of other good small arms.
          The guns were okay, but all the designers hated the cartridge that they were forced to work around.
          The internecine political caliber wars and associated weapons to fire them was always brewing, and just not in the US Army, but other nations as well.
          It always seemed that the whole Armalite-Colt AR15 and M-16 program was a political end run around the large caliber US Army -National /Armory crowd.

      • Don’t they basically make what they’re asked to, anyway? If the military had actually demanded a small-caliber rifle from them, I imagine that they wouldn’t have a problem designing and manufacturing one.

        • The Army and the National Armory System were very tight and very conservative. The small caliber carbine program had been brewing for years.

      • The M14 was a garbage in/garbage out situation driven by the reactionary army ordnance department demanding a detachable magazine M1. John Garand’s design for an M1 replacement was a small caliber bullpup similar to the Enfield EM-2 and there was another design that used roller locked blowback like a G3. The armories were capable of designing advanced rifles, the problem is the establishment didn’t want them and the military-industrial complex wanted lucrative development contracts.

        • There’s a book that’s a eye-opening read on the sort of thing you’re mentioning. “Misfire:”

          The problem had been for 100+ years that Ordnance wanted heavy, heavy bullets. The original bullet for the 1903 Springfield was going to be a 220 grain pill, which gives a .30 cal rifle a hefty recoil. The armory went to a 150 to 147 gr Spitzer bullet after we got a ass-whuppin’ from the 7×57 at San Juan Hill.

          Today, by outsourcing the production of small arms, we’ve got a workable rifle chambered in a varmint cartridge that has us dancing around every couple of years, trying to do something “better” than the varmint cartridge.

          As a taxpayer, I’d like to have an AR-based platform with a 6.5mm pill in the 120gr range and call it done.

    • Maybe not so much that, but I did always wonder how a “2011” would have gone if enough development effort was put behind it. Though a lot of 1911 fans would probably recoil at that.

    • Nope, always cutting edge. just change the barrel length or slap on a new optic, BAM new weapon system.

      Marines and Soldiers not having the decency to die, costing millions in prosthetics and after care? Issue carbines as standard, justify with CQB. Because off-the-shelf bullpup or SB w/ other caliber solutions are umm icky, and the military is having to look under the sofa for cash apparently. Folks still asking questions? Explain just how damn powerful and perfect the 5.56 is and as such a significantly shorter barrel is still not enough to make it any less awesome.

  12. This may very well be a multiple award IDIQ contract (Indefinite Delivery Indefinite Quantity) contract. It’s not uncommon to do multiple awards on these types of contracts. (I haven’t been able to find any additional info on this contract at FedBizOpps). Multiple awards guarantees the Government has at least two suppliers for a critical product. Mulitple award IDIQ contracts are a good news/bad news arrangement for vendors. The good news is the awardees now only have to compete against each other for the delivery orders. The bad news is all that you’ve won is the right to continue to compete against the other guy every time the Government issues a delivery order. More than one company has been driven into bankruptcy trying to undercut the other awardee on delivery order bids. You can win the battle yet lose the war. The other downside is that while the contract is worth up $212M you can walk away with something far less. The Government is only required to issue you on delivery order for a minimum amount. The rest of the delivery orders on the contract are competitive quotes against the other awardee(s).

    Colt and FN may have won the contract but let’s see how many delivery orders each vendor receives.

      • When it comes to COLT is not the state, the union. Colt has had a succession of bad management since day one. The current crop is just an example of Meet the new boss same as old boss. Except with a separate set issues.

    • +1. This is a Firm Fixed Price (FFP) IDIQ. The government locked in two suppliers to sell it up to $x worth of weapons for a given time at a given price: no more. Unless they awarded a “seed task” for an initial quantity of guns, there is no guarantee that they will buy ANY guns from either of the awardees.

      For a firm in financial trouble, deals like this can be counterproductive if they can’t fulfill a delivery order if/when they get one. If they can’t do the work on time, or do it profitably, then they are hosed.

  13. Meh. This, is what happens to a corporatist mfr, whose primary customers are the GovtTerrorists.

    They deserve to go bankrupt.

    They supported Clinton’s anti-gun initiatives, hoping their miltary cotracts would keep them immune from actual market forces.

    F’em. Plenty better AR’s, 1911s, and ‘Pythons’ manufactured by others.

    Even gun collectors/sellers will be happy: more perceived value in a “once upon a time, in a gun galaxy far far away, there existed…” – company’s products, anyway.

    They’ve never innovated. They’ve always bought others’ designs as is. The logo will be the only memorable vestige of those anti-‘civvie’ gunowner douchebags.

    Not gonna miss them, in the least.

    But really, they had to buy LWRC eh??


  14. It is all about the money. The executive most probably got a bonus for being anti-gunners and relying on government contracts. A good example of putting yourself out of business in the future is the F-15 Eagle 30 million the F-22 Raptor 30 BILLION??? I want every nut, bolt, rivet, electronics, EVERYTHING priced to justify 30 BILLION, an increase of 3 zeros. No double standards put the DC politicians on Obamacare and SS.Thanks for your support and vote.Pass the word.

    • A single Raptor actually costs around $150 million to manufacture. The billion price tag includes the R&D cost of the entire program, divided by the number of units. The figure that you’ve cited for Eagle is also manufacturing cost, so you need to compare apples to apples. Also note that $30 million is a 1998 price; you need to add another 30% to account for inflation before you can compare.

  15. It looks like the deal provides corporate welfare to Colt (to help a domestic manufacturer) and a production order to FN to keep a preferred supplier operating.

    I can’t imagine Colt actually getting a production order unless it is for a premium rate-per-unit because FN is over committed on other orders and the Army’s order is urgent.

  16. First let me address the data rights issue discussed at the beginning of this thread. Data rights are not the same thing as copy rights or patents. Data rights last forever. In the world of government contracting whoever owns the data rights either have to be awarded the contract for a new production, an attempt has to be made to purchase those rights, or, an agreement with another entity, whether it be another contractor or a government facility, has to be made usually through a partnership. This would require a non-disclosure agreement between those involved. There are a lot of variables here, but this is the simplified explanation. As to the type of contract: it was mentioned that this is a FFP IDIQ contract. What was not mentioned was if this was a FAST contract. It is not necessarily true that two or more contractors bid against each other for every delivery order. If this is a FAST contract then there is a primary contractor that all delivery orders will go through. These DOs will then be passed on to a subcontractor if need be. I personally have not reviewed the contract so I am not certain on this particular point.
    As for all the negative comments regarding Colt, the company, and the products. Lets face it; Colt has been in trouble since the 70’s. Bad management, bankruptcy, multiple sell outs, production of several very substandard weapons that were supposed to save the company, etc….I cannot disagree with any of these points. But there is still a very loyal following. And many of their weapons, specifically those standards they are known for (1911s) still receive high marks. I recently purchased a MK V Gold Cup .45. I am very happy and have nothing but positive things to say about it. Unfortunately, so many of our (meaning US) manufacturers have sold out and are being produced by other companies in other places. Since it has already been mentioned I will reiterate here: the Springfield XD series. It is made in Croatia. Now, do not get me wrong. I own one. It is a great gun. Never had a failure, and I have put many a round down the tube. Matter of fact, it is my primary carry. The Colt Gold Cup 22 is made by Walther. And let us not forget, Winchester, another icon, has not really existed for years. The guns have been produced by a variety of manufacturers since 2006 (can you say Japan and Portugal?) with Herstal Group (FN, Browning) being responsible, and the name is owned by Olin. I could go on but you all get my point.
    Look, I understand the greed of corporate leaders. We all know how many major US manufacturers have cut corners to beef up their bottom line. But let us not throw out the baby with the bath water. If you want it cheap then buy what is being imported from the Philippines. Those guns are getting great reviews. Or buy any of the middle grade weapons. Truthfully, that is what makes up the bulk of my collection. And they are good shooters. I just do my research and find the reviews before I buy. But my Colt has received the highest of reviews since its inception. And that has been quite awhile. The Gold Cup, and its predecessors, have long set the standard for an out of the box factory production target shooter. Yes, I wish some one who really cared about the company would buy it. But I personally do not want to see it go away. We have lost enough true American Icons and this is one I would like to remain.

  17. Nick, while I understand your article’s overall goal of informing the firearm community of Colt’s ownership of the TDP & the royalty they get paid per each M4 manufactured, the statement of them “not getting the work” on this contract is not accurate. Those contracts are written with a guarenteed minimum delivery quantity for FN & Colt. While it’s possible that the govt may ultimately elect to issue more delivery orders on the FN contract, the inclusion of Colt in the contract language & subsequent announcement is not just for the royalty inclusion: Colt will actually build some M4s under this contract.

    Daniel E. Watters hit the nail on the head in one of his comments on another site: the split award was likely made to diffuse any award protests. It’s a win-win situation from a government contracting command’s perspective: you avoid long drawn out legal battles (remember the last M4 contract saga involving Remington/Colt/FN) and you ensure that there are two available suppliers for the life of the IDIQ.

    Finally, as to those who think Colt’s TDP royalty can give them any kind of financial relief…they only get about $10 bucks per rifle in royalties. Put it this way: their bond debt at the start of the bankruptcy was what, $250 million? They only made a little over $50k in royalties off one of the latter delivery orders from the 2013 M4 contract with FN. That equates to .02% of their bond debt. Granted, it’s not their only source of revenue but it’s also pretty much chump change.


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