Originally Posted by
Core781
Good bit of history. I see two wrongs in this story, and of the two it seems Colt is the lesser. I understand the US owns the TD but Colt invented the M4 and its every bit part of their manufacturing process.
Actually, I believe Colt owns the TDP. Snippet from the article I didn't include:
In June/67, in its role as the DOD’s designated procurement agency, the US Army purchased a license from Colt for the TDP and the rights to produce the M16 family of weapons and its component parts.
Some wonder why Colt proprietary rights to the M16 TDP and M4 TDP are still given such reverence by the Army, long after most applicable patents had expired. For example, the Army paid royalties on second-sourced M16 rifles and parts until 1990. It is more glaring in the case of the M4 as very little of the M4’s original design was ever patented by Colt. The short answer is that the Army agreed to such terms in the original 1967 licensing agreement and its amendments, particularly the infamous “M4 Addendum” of 1997.
Originally Posted by
Core781
Colt selling the DOD M4 for the same cost they sell citizens is bitter sweet if you ask me. The DOD per weapon probably included a warranty and additional accessories that we see with these contracts? So how is pricing an M4 at $1000ish price gouging?
Well, because of this:
At the time, (of the M4 Addendum) it probably seemed like a good deal to give Colt sole-source rights to the M4, in return for the DOD maintaining its rights to second-source the M16 and its spares.
All seemed well, until the US Army dramatically expanded its issue of the shorter M4 Carbine over the M16 during its operations in Iraq and Afghanistan, ultimately leading to decision to issue a “pure fleet” of M4.
At the same time, Colt’s (sole source) prices for the M4 began to steadily increase:
In December 1999, Colt was charging $521 per M4 carbine (DAAE20-98-C-0082-P00011)
By December 2002, Colt’s price for an US Army-configuration M4 carbine was $912 (DAAE20-02-C-0115-P00004).
However, the Army was able to gain certain concessions over the years. In July 2006, Colt agreed to lower its prices, and begin to provide basic issue items like the Back Up Iron Sight (BUIS) and M4 Adaptor Rail System (ARS), which had formerly been provided to Colt as Government Furnished Material (GFM) (W52H09-04-D-0086-P00025).
Before this concession, the price of the M4 and M4A1 had grown to $1,012 and $1,029, respectively (W52H09-04-D-0086-0040).
Afterwards, the price of a basic M4 dropped to $815, and with Colt-provided BUIS and ARS only $1,142 (W52H09-04-D-0086-0040).
At the time of the final sole-source delivery order in December 2010, Colt’s price was just over $1,221 per fully-equipped carbine (W52H09-07-D-0425-BR02 external link).
So, when the Armed Forces began to transition to a fleet comprised mainly of M4's, simply by economy of scale the price should have dropped. Yet between 1999 an 2002 the contract price of an M4 INCREASED $391.00, or 42.8%, per carbine. During this time, according to CPI, inflation was 7.4%.
So, we are buying more, but paying much more, this makes no sense, and as a taxpayer it ought to offend you.
Now, pay attention to the last sole-source contract price of $1,221.00.
In April of 2012, Remington finally broke the chain of Colt contracts with the U.S. Army, placing an $84 million bid for a run of 120,000 M4A1s, with 24,000 carbines to be delivered starting September of this year.
The cost per Remington M4A1 was just $673 per. Their bid severely undercut Colt’s previous contract, which priced the rifles at over $1,200 a piece.
If you want to do the math, that is 44% lower than colts previous price. Unfortunately, this bid did not stand:
After Remington won the first bid, Colt immediately filed a complaint with the GAO stating that the company did not properly calculate the royalties as part of their bid, and the GAO found in Colt’s favor, at least partially.
Following the decision, the GAO told the Army that they had 65 days to solicit new bids from vendors or face Congress if they went ahead and signed the Remington contract. Not willing to face the legislature over a budgetary decision, the Army complied.
Although the list of bidders was confidential, it was obviously going to be between Colt, Remington and F.N. Herstal.
As we all know, FN won that contract. Their price was $642.00 per M4A1, roughly 46% lower than Colt's last sole-source contract price.
Now, this may not be price gouging to you, but it is to me. As a taxpayer I find it particularly offensive. But you do you.
Originally Posted by
Core781
So I would avoid the price gouge statement unless it was more than Colt charged retail which is really not the case given the additional requirements a DOD contract imposes on this equipment.
That statement is laughable. If you are buying a hundred rifles for a police agency, would you expect to pay MSRP?
Last edited by 26 Inf; 06-01-20 at 11:38.
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