The Air Force purchased 8,500 Colt Model 02s prior to the -508 contract, which were designated simply "AR-15," what we would call a COTS designation today, but they were U.S. Property marked.
The -508 "one time purchase" contract was for the M16 and XM16E1--both the 603 and 604 were developed from the 602, the -508 Contract, therefore, was essentially for "modified 602s" that would become the XM16E1 (603) with the manual bolt closure device added per the Army's request, and the M16 (604) with the manual bolt closure device omitted per Air Force request.
The contract was written for what existed (602), but we are ultimately discussing what they became, prior to the contract, the M16 and XM16E1 were at best prototypes [having been built by modifying 602s] that had not been granted a model number, -508 "created them," and ordered those 602-based prototypes into production, which then became the 603 and 604.
It's just like this little bugger:
Built on a 602 lower, but I wouldn't call it a 602 (I've fought this fight before), but it never went in to production, so it never got any kind of model number that anyone has been able to find.
Regardless of the semantics of the model numbers--the upper in question was primarily used for M16 rifles being delivered to the Air Force.
~Augee