I think you are getting the two programs a little confused:
1033 allows agencies to get free gear (including weapons) through DRMO. The weapons transfers follow a different process than normal 1033 requisitions. For most gear, from boots to laptops to trucks, you find it on the internet using the secure website, put in a request on-line, and then ship the gear after it is approved by your state coordinator, LESO and MILSTRIP. Your agency pays shipping, unless the gear came from a "Recycling Control Point," which have their own funding for shipping. Get an agency FEDEX account and you'll do fine.
Weapons through 1033 require execution of a form letter, signed by the CLEO of your agency (Chief, Sheriff, etc.) and a non-LE official from your political subdivision (City Manager, Mayor, County Commissioner) with some very specific language. Weapons transfers require the agency to pay for inspection and shipping, which is different from the other 1033 programs. those costs are generally about $20-30 per weapon, as you noted. the process takes 2-4 months. You are also limited in the total number of weapons you can get; for M14s and M16s, you can only have enough weapons from each type for 20% of your agency's sworn LEOs. That means that if the SO has 10 deputies, they can have 2 M16s and 2 M14s. If they have 100 deputies, then they can have 20 of each, and so on. These weapons are still legally machineguns under the NFA of 1934, and must be registered on a Form 10 with ATF as soon as they arrive at your agency. Even if you subsequently alter them into Semi-only configuration (more on that later), they are still MGs in the eyes of the law. These weapons can not be transferred, sold, bartered or anything else without prior permission from LESO, and they will only give that permission if you are giving them to another bona fide law enforcement agency. The weapons are generally used, although they are usually rebuilds that were overhauled at the depot or arsenal level before being placed into storage. All are guaranteed to be functional, and are in good enough shape that the Army would issue them to its own people, if need be.
As to making them "Semi" only, that is easy. The M14s ship in semi configuration as a general rule, and one would have to buy a full auto selector kit (about $20 from SARCO last time I looked) to make one FA, so no worries there. The M16s can be easily and cheaply converted to SEMI only by buying a new set of AR15 fire control parts from a reputable manufacturer. Bushmaster sells these for about $33, and they will take a trained armorer about 2-3 minutes to swap out. If one wanted to be cheap, one could have the same effect with a dremel tool and about 10 seconds with the disconnector, but why skimp with a duty weapon?
The 1122 Program is different. 1122 lets agencies purchase gear at the GSA DOD price through DRMS or GSA, depending on who the vendor is. This can help your agency get some of the big group discounts that are available to the feds, and really comes in handy on things like vehicle purchases and body armor, and can let you dodge the real hassle that purchasing can often be by bypassing competitive bidding, formal bid processes or execution of contracts, by utilizing co-operative purchasing agreements (I hate the fact that I know so much about this). 1122 is usually administered by the same people who run 1033, but that varies from state to state.
The only weapons available through 1122 are through DRMS, and they are the M16/M4 family of weapons. The M16 variants will be brand-new weapons, but your agency will pay the government price. M16A1 are available for around $420, which still isn't bad. M16A2s are around $600; still not bad. The M16A4s and M4 carbine family are around or over a grand, and have a wait time of a 1-2 years. M4s are currently not available. For their prices, I can get new Colts from an LE distributor for less, not to mention Bushmasters or something else for significantly less than the Colts. See here for the information, straight from the source:
1122 Program-Rock IslandAs to the "why" of rifles/carbines for patrol, shoguns are generally considered obsolete, and rifles do most things much better. They are a good system, and the "patrol carbine" is rapidly becoming (or already is) an accepted standard in modern American law Enforcement.