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More money could be made if the government simply took their old M16's, registered them on Form 4's and sold them to Civilians.
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Ya'll are smoking crack if you think .gov or .mil would ever dream of having a "clearance sale" on weapons.
All the old weapons get given off to training units such as Cadet Command (I had an M16A1 when I went through my ROTC gay-ness at Ft. Lewis in early 2000s), given/sold to PDs or allied nations.
Anyone who has been around the military and seen how anal it is with weapons, knows their never going to let them be touched by a civi.