AFAIK, NO M14 rifles were sold to police departments or to individual officers. Some were loaned to departments but were still considered U.S. property and could not be sold to anyone by the department, since the department didn't own them. (I am talking here about a GI M14, not a civilian semi-auto clone. An M14 is legally a machinegun, whether it fires full auto or not.)
If the department did somehow own the rifle, and the rifle was registered prior to 1986 and is transferrable, it could only sell the gun on a Form 4 just like any other owner of a registered NFA firearm. So the officer should have a copy of the approved Form 4 transferring the gun to him. If he does not, it is possible that he is not the legal owner, but that is not your problem. Unless he can show a lawful transfer to him [Form 4, not just a bill of sale], your action should be to run, do not walk, away from any deal. If he tries to sell the gun to a dealer, and does not legally own it, the dealer should call BATFE; he would suspect a set-up and would want to protect himself.
If he is the legal owner, he can sell directly to a buyer within his state, state law permitting. He does not have to go through a dealer.
Just as a note, more than one police department misunderstood the deal with those guns, and were or are under the impression that they belong to the department and can be sold. Some even thought that they could sell or even give auto weapons to individual police, and some got them as retirement gifts, no papers. BATFE has had to straighten out quite a few PDs and individual officers on the law.