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.