That's BS.
I used to have the original report. The contest wasn't scrapped, it was completed.
I believe 5 rifles completed the contest with "passing" scores. There wasn't a definitive winner. The Colt (M4), HK (416), Remington (ACR), FNH (SCAR) and LWRCi (IC) all performed well and at the desired levels.
The conclusion that I read was, none of the weapons greatly excelled beyond the performance of the M4, and the M4 successfully achieved all the marks set. The finding was, "why change?"
The only thing that the M4 did significantly different was change to a piston operated system.