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People are far over think this. More than anything this was a budgetary decision. Even in USSOCOM, funding is not unlimited. M4 rifles are provided to USSOCOM from their parent organization budget while the SCAR isn’t service common so USSOCOM dollars would have to be spent to buy them. Could you justify spending limited funds on a 5.56 rifle that offered little to no improvement when you got M4 rifles for free because they were service common? Especially when you had other things to spend the money on.
By the time the SCAR was ready, the Block II offered just as much or more to the war fighter than the SCAR did.
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You are correct regarding budget restrictions, but the gentleman in the video was involved in the actual testing and spent a lot of time deployed over seas on our behalf. He points out several specific things regarding the SCAR 16s (and points out the SCAR 17s did not necessarily have those issues):
1. Reciprocating charging handle would get caught on things when shooting behind barriers or obstacles. He points out it’s not the charging handle itself is the issue, its the placement of it close to the rail or where your hands/sling would lie vs an AK.
2. Weak stock latch that failed repeatedly during their tests
3. Bad magazines could easily cause double or triple feeds that could cause cases to get stuck in the receiver rendering the rifle useless. Not a fault of the rifle, but US GIs often get handed that “bad magazine”, which was a concern. The video author points out he could more easily fix a M4 than the SCAR 16s when this happened.
4. Bottom rail attached to the barrel got too hot. Remember, they were practicing with full auto fire.
Combine these issues with a poorly planned procurement process (he repeatedly points out that SOCOM operators/gun guys were not involved in the initial proposal) and improved “know how” on how to keep a M4 carbine running right, sticking with the M4 made sense in 2008-10. I’m sure FN learned some things, and could have fixed them quickly. Comes down to $$$ and desire. I still believe the SCAR is a better platform for suppressed use than the M4, so maybe the NRCH version and some further improvements could allow it to supersede the M4 in 5.56 NATO.