More specifically, some fraction of the production run that was randomlyselected for testing did not meet one or another acceptance standard, so the whole run was rejected. Military acceptance standards are built for high levels of confidence in the ammunition's functioning and performance, so instead of a commercial approach where perhaps a second random sample was tested to zero in on the production problem, the military standard says "no" after too much variation in the first sample. It could be that some small (acceptable) number of rounds was outside of accuracy standards while another (also acceptable) number failed velocity and yet another small (and still acceptable) number didn't pass the waterproofing tests.
This stuff is not the "floor sweepings" that were marketed in bulk several years ago, as evidenced by the completion of the production process (rounds with green tips and on strippers in tip protector sleeves). I can't wait for the combination of survivable weather and free time I need to test out my own box of "AC1" (I.e. Widener's picture, not the OP's).