E. Nigma #32:

What I read was that the Army decided to up the required muzzle velocity for the M-16, which “just happened” to require the replacement of the low residue powder used in the original weapon with the same powder used in 7.62 NATO, made by the same company, Olin.

The increased muzzle velocity led to a higher automatic fire cyclic rate and that, combined with the dirtier powder, led to the weapon becoming unreliable. Various fixes were introduced to correct the problem and Eugene Stoner, the AR-15 designer, said they were all stupid and they should just go back to the ammo the gun was designed to use.

In Congressional testimony the source of the requirement for the higher muzzle velocity was never identified. It “just happened” – and happened to benefit a certain contractor that officials were friendly with.