The U.S. Army plans to cancel its Improved Carbine competition before conducting the final, soldier-evaluation portion of this multi-year effort to replace the M4 carbine.

Program officials are in the process of reprogramming the $49.6 million requested in the proposed fiscal 2014 budget to buy 30,000 improved carbines, according to a source familiar with the effort.

Army weapons officials recently completed Phase II of the competition where testers fired hundreds of thousands of rounds through carbines submitted by gun makers such as Heckler & Koch, FNH-USA, Remington Defense, Adcor Defense Inc. and Colt Defense LLC, the original maker of the M4 carbine.

The service’s original plan was to award three contracts to three gun makers for the final phase of the competition, which would involve soldiers firing nearly 800,000 rounds in three separate user evaluations before choosing a winning carbine.

Now the Army is rethinking how to use what amounts to more than $300 million the service budgeted for new carbines through 2018. The decision now rests with Secretary of the Army John McHugh, according to another source with insight into the Army acquisitions community.

Program Executive Office Soldier manages the Improved Carbine competition but officials would not comment on this story because it is a Department of the Army decision, PEO Soldier spokeswoman Debi Dawson said. Army Public Affairs did not respond to requests for comment from Military.com by deadline.

This latest development in the five-year effort comes six weeks after the Pentagon’s Inspector General announced it was auditing the improved-carbine effort. In March 19 testimony before the House Committee on Oversight and Government Reform, the watchdog group said there were concerns that “DoD may not have an established need for this weapon nor developed performance requirements … such as accuracy, reliability, and lethality,” according to testimony.

Army officials and program experts were quick to point out, however, that the IG testimony contains misunderstandings about basic facts of the carbine- improvement effort. The Army established its requirements for the improved carbine effort three years ago.

The requirements document calls for a weapon that’s almost twice as accurate as the current M4. It also emphasized improved reliability, serviceability and a longer-lasting barrel.

McHugh is not taking the audit lightly.

“There has been some input recently out of the Department of Defense as to the Army’s requirement and lack thereof. We are trying to go through those findings to make a determination,” he told lawmakers during an April 25 House Armed Services Committee hearing.

The Army also recently decided to replace the standard M4 with the M4A1, as a result of its M4 Product Improvement Program. The M4A1 is the special operations version of the weapon that’s been in use for just over a decade. It features a heavier barrel and a full-auto trigger. The Army’s decision to dump the current three-round burst trigger will give shooters a more consistent trigger pull and lead to better accuracy, weapons officials maintain.

The Army has budgeted $21.2 million to buy 12,000 M4A1s in the proposed fiscal 2014 budget.

At the completion of the carbine competition, the Army had planned to conduct an analysis of alternatives to see if the winner is a significant improvement over the M4A1 to justify the investment.

Gun makers involved in the competition said they have heard nothing from the Army about Phase III of the competition. Competitors didn’t want to be named in this story but said they would not be surprised if the effort was canceled because they never believed the Army was serious about replacing the M4 family.

McHugh told lawmakers in late April that he hoped to update them by the beginning of the summer, but the Army could make an announcement much sooner, the acquisition source said. PEO Soldier has scheduled a May 23 roundtable for reporters which will include officials from Project Manager Soldier Weapon from Picatinny Arsenal, N.J. and the Maneuver Center of Excellence at Fort Benning, Ga.