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I have a guess that it may have been too tied closely with the whole YF-23; remember it and the XCIWS blade were specifically designed for the Black Widow, so I figure there may be issues adapting it to other TSFs. And then once. YF-23 lost, everything associated with it was cast aside...
Other theory may be due to the ammo mix - apparently the board wasn't too keen on the XAMWS-24's reduction in 36mm for increased 120mm capacity. And then there's the whole fighting with bayonets thing... But that WOULD make it useful as a close range emergency weapon.
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