Three months after refusing to produce what the Clinton Administration considers “safer weaponry,” Colt’s Manufacturing Company has lost a contract with the US Army that could be worth as much as $50 million, according to CNSNews.com.

A spokesman for the Cato Institute in Washington called the government’s decision “mighty suspicious,” but a senior defense analyst said he sees no connection between the two incidents. Colt Manufacturing will stop selling its M-16 rifles to the Army in October 2001. The new multi-year contract, according to Army spokesperson Nancy Ray, has been awarded to Belgium manufacturer FN Herstal, doing business as FNMI in Columbia, SC.

“The new one was awarded, based on a ‘best value’ (bid) that considers not just cost, but past performance, a quality system, and cost,” Ray said. Ray could not confirm the dollar amount or length of service of the FNMI contract, but did say she expected it “to be more than a year.”

Other sources figured the contract to be worth between $6.5 and $50 million, but Colt and FNMI officials could not be contacted for comment.

The contract switch comes at a time when Colt is suffering financially from industry lawsuits and a 1992 brush with bankruptcy. In October 1999, the corporation attempted to defray some of the legal action by announcing its intent to halt sales of consumer handguns. After that announcement, at least 300 workers lost their jobs, as Colt closed several of its production lines to focus on providing firearms for the military, police and collectors.

The government’s decision to switch contractors will place even more financial hardship on the company; Colt personnel reportedly sold more than 32,000 M-16s to the Army between 1997 and 1999.

“Any time you do work with the government, it’s more lucrative,” said Chris Hellman, senior analyst with the Center for Defense Information. “The fact is, Colt is part of an ailing industry in this country. They’ve been downsizing for the last 20 years.”


Hellman saw no correlation between the contract award to FNMI and Colt’s recent refusal to participate in Smith and Wesson’s concession to the government to produce “safer” firearms.

Cato Institute Senior Fellow Robert A. Levy said, however, once that agreement had been reached, “there was a lot of talk that Smith and Wesson would be favored” and other gun manufacturers would be “disfavored.”

“It’s a mighty suspicious timing,” Levy said, “that Colt did not sign the settlement agreement and that they now should lose big government contracts. (Since October) the majority of their business has been with the military and police community. I don’t know how large Colt is ... how important the contract was, but it seems to me (if it’s for $50 million), it is a very large contract.”