Colt Puts Kibosh on Army’s Remington M4 Contract. For Now

There were probably a few champagne corks a-popping in Ilion a few months back when the Army announced that they’d be moving the bulk of their M4 purchases from Colt to Remington. But the Connecticut gun maker did what any self-respecting government contractor would do when faced with the prospect of  losing a major chuck of business; they put their attorneys to work trying to get the decision overturned. And gearscout.com is reporting that the word from the bureaucratic battlefield is: mission accomplished . . .

The Government Accountability Office has upheld Colt Defense, LLC’s protest of the Department of the Army’s $84 million contract award to Remington Defense to produce up to 120,000 M4 and M4A1 carbines. This means the contract award could be slowed, reevaluated or entirely recompeted based on the Army’s response to the ruling.

Now the Freedom Group brain trust is dealing with a painful and frustrating case of contractus interruptus. What was wrong with the Remington award?

“Colt’s protest was based on the manner in which the Army evaluated the competing bids it received,” says Jeffrey G. Grody, Senior Vice President and General Counsel, Colt Defense LLC.

The sticking point: pricing. In a convoluted sort of way.

At issue is the way the Army calculated the licensing fee Colt is due as part of the original M16 contract signed in 1967 and amended in 1997. Looking at the 2011 solicitation, the  Army calls out a blanket 5 percent “royalty amount pursuant to a license agreement” between Colt and the U.S. government in section M.5.2.3. The terms of the actual licensing agreement are not known, but sources explain the royalty calculations are more complex than can be covered by a blanket percentage and when calculated properly, could narrow the price gap between Colt’s and Remington’s bids.

Holy technicality, Batman! (If you’re having a slow day at work, read this for a little background on the whole M16 1967/1997 agreement between Colt and the army on the M4.)

Now the Army has three options; they can reevaluate the submitted bids, taking the GAO’s revised pricing calculations into account, they can alter the original contract terms and request new bids or they can just tell the GAO to pound sand and buy the rifles from Remington anyway. How can they do that? As Emily Dickinson might have put it, the GAO’s finding isn’t binding.

Meanwhile, interested parties in Ilion will be on the edge of their collective seat waiting to see if and when they can crank up production while their lawyers go blind burning the midnight oil and looking for an appropriate comeback. Just another day in the military procurement bidness. Hooah!