Recently, Remington Arms, Co. sued the United States Government regarding the awarding of a contract for the purchase of new M4 Carbines for the military. The extremely lucrative contract was for the procurement of 292,000 M4 Carbines (the rifle that has been selected to replace all antiquated M-16 rifles still in inventory), at an enticing $212 million.
The basis of the lawsuit surrounds the decision of the U.S. Government to select Colt as one of the procurement companies (FN USA being the other) over Remington, when at the time Colt was still under Chapter 11 bankruptcy restructuring. Remington charges the selection was improper to a company in bankruptcy.
Does the Remington Suit Kill Colt?
In September, 2016 Colt Defense, LLC, and Fabrique Nationale America (FN) were the lowest bidders and each won a portion of the U.S. Army $212 million contract for 292,000 M4 Carbines. Remington also bid, but it was not accepted. However, at the time the contract was awarded Colt was still involved in Chapter 11 Bankruptcy proceedings (a second Chapter 11 event in very recent years).
Remington’s legal team successfully argued the government had not accounted for Colt’s most recent financial records, and the decision to award a contract should be reviewed in light of these records. Needless to say, it never looks right for the Federal Government to enter into major contracts with a company in bankruptcy. The Federal Court decided in Remington’s favor, agreeing their argument for additional financial records consideration was valid. In addition, the Court also prevented the U.S. Government from placing more orders with Colt Defense, LLC.
The suspension of orders for Colt could be the death toll for the iconic American company, as a major portion of the plan to exit bankruptcy depended upon this government contract. The re-evaluation of Colt’s financial status could take precious months, and there is no guarantee that Colt’s contract will be reassigned. In fact, it would seem on the surface to make more sense just to award the rest of Colt’s order to the other lowest bidder, FN.
All of this does not look good for Colt. It was not like Colt had plenty of buyers banging down the door beforehand, and now, with a major order all but cancelled, the road out of bankruptcy may have come to an end.
Remington’s Big Gamble
The Remington lawsuit appears to be a very reasonable suit. They may not have been the lowest bidder, but they are not in bankruptcy (at least not right now). However, Remington’s hope that the Court’s suspension of the Colt deal will turn out in their favor may not play out as planned. FN USA could make a contention for the remainder of Colt’s procurement, based upon their lowest bidder status. They do have a substantial manufacturing capacity that may be able to complete the order that was to run through 2020.
In addition, Remington is not in the best of shape either. Many have commented on the poor quality control, and general design failures Remington has suffered recently. In the last 5 years Remington has suffered major recalls, failed launches of new firearms, and a generally “oh hum” review of how the company has fared under the ownership of financial investment group Cerberus:
- Remington 700 trigger recall scandal
- Remington 887 recall
- Remington R51 pistol complete recall and failed return
- Cerberus attempting to find a new buyer
- Moody’s Investor Services downgrading Remington.
It is interesting that Remington suffered a similar fate in 2012, when Colt sued over Remington’s award of an M4 contract. The result of that lawsuit appears to be playing out just the same as this new one – FN was awarded that contract, and looks to completely capture this new award as well.
FN USA is headquartered in South Carolina, and their manufacturing facilities are large enough to provide parts and barrels for several smaller companies, like Palmetto State Armory. In a way, FN (newer to America) is proving to be the more “American” firearms company, while two of the American icons struggle to find relevance in a market that demands so much more than just a name.
Colt’s History Could Be Just History!
Colt’s Manufacturing Company (Colt) has been in business since 1855. It is one of America’s oldest and longest running firearm manufacturers, behind Remington and Smith & Wesson. Early on Colt became extremely popular, providing significant assistance to the Union Army during the Civil War, and going on to become the most popular handgun maker during the Wild West. The popularity of the Colt Peacemaker coined the saying, “God made all men, but Sam Colt made all men equal”.
Colt has been the primary manufacturer of the M-16 and M-4 line of rifles since the company bought the design from Armalite. However, many have complained that Colt has depended too heavily on large, military orders and has all but ignored the ever-increasing civilian market. In addition, many have started to believe that several alternative AR-15 rifle manufacturers are just as good, if not better, than the Colt designs.
Every year at SHOT Show the commentary from media has been progressively more negative due to Colt’s apparent entitlement mentality, without much innovation to back up such a stance. It is almost like Colt struts around and expects their position of dominance to remain simply because “we’re Colt”.
Considering Colt has been in bankruptcy twice in recent years, one must wonder if upper management really understands the market has pushed the AR-15 much farther than what Colt might want to believe. Simply having the original design just isn’t enough anymore, and there are plenty of “names” out there capturing remarkable reviews.
Even the Colt Model 1911, which has gained in popularity, cannot keep up with a firearm market on fire with new manufacturers, highly sophisticated CNC machining, modularity upgrades, and customization for the masses.
The popularity, and high quality manufacturing continued into the 20th Century as the famous firearm maker paired with famed designer John M. Browning to develop the iconic Model 1911 that would become the U.S. Army’s official pistol for 75 years. The 1911 has also seen a resurgence in popularity in the civilian market, though much of that growth has come from custom builders like Les Baer, Kimber, and Wilson Combat.
It will be interesting to see if Colt can resurrect itself one more time. I really do not want to see an American icon go down, but I fully understand that to be relevant in the market, a company has to remain relevant. Colt’s insistence on excellence by name only, and its overdependence on government contracts, has caused the company to almost completely miss the explosion of the civilian firearm market.
When Colt released new “bargain” AR-15 models recently, everyone at SHOT Show was in complete disbelief. Everyone could not believe that Colt would wait over 10 years since the sunset of the Assault Weapons Ban to give a nod to an ever-increasing civilian market. People didn’t know if it was Colt desperately begging to be considered, or if it was a lame attempt of appeasement from a company that had become known for their arrogance. I have a feeling it was a little bit of both.
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