Originally posted by Fingolfin_Noldor:
Politics. The gun is German and the American Gun manufacturers
weren't very happy. So politics had the entire process turned into
open bidding. That said, the big American gun manufacturers
actually suck big time. M16 wasn't even designed by them
but by a smaller company that has since diminished since they
idiotically sold the design for the AR-15 to Colt who now holds the
patents. Quite a lot of the guns used by the American
military are foreign, like the Minimi and I think at one point of
time they used the FN MAG which we also use as their own GPMG was
riddled with problems which I think persist to some extent
today.
The AR15/M16 was designed by an American, Eugene Morrison Stoner
born in Gosport, Indiana USA.
The company which he worked for when he designed the AR15 is
ArmaLite, and ArmaLite is still around making weapons such as the
AR18 and the AR10 (Which the US Military is fielding).
http://www.armalite.com/
ArmaLite didn't do too good a job at marketing the AR15 it was only
after they sold the design to Colt did it become a success that it
is now. It was up to a Colt salesman and a 4 of July watermelon
shoot and USAF General Curtis LeMay.
As for why the XM8 was cancelled I would say that it is because of
the 20 million of US tax payers money was used to develop it from
an already fielded design. Which offers little or no advantage over
the currently issued M16. The XM8 was an off shoot of the just as
dead OICW program.
It weighs just as much as the M16, the M16 is just as modular,
shoots the same round as the M16 just from a shorter barrel which
brings us to another point, there have been complains about the
5.56mm lack of "stopping power" and yet the standard barrel length
for the XM8 is going to be 12.5" vs the M16's 20" or the M4's
14.5". And I have a hard time believing that HK's octagonal rifling
will offset the effect of the shorter barrel.
The XM8 is based off the G36 which is in turn based of ArmaLite's
AR18. 
What I don't get is the Heckler and Koch devotees who believe in
their heart of hearts that if it comes from Oberndorf, it
automatically represents the zenith of modern small arms
development. Never mind that HK has produced one
commercially successful weapon, the MP5. The G3 was a moderate
success, but it certainly wasn't as successful as it's contemporary
competition, the FN FAL.
Side note the folks from ArmaLite that brought you the M16/AR15,
the AR10, the AR18 also brought you the Ultimax 100, Jim
Sullivan.
