Only after proper foundational and ongoing repetitive refresher training, cultivating warrior mind-set, and ensuring weapon system reliability do you need to worry about ammunition selection. Most folks would be far better off practicing with what they have, rather than worrying about what is "best". As long as you know your what your weapon and ammo can realistically accomplish, it is all just a matter of training and shot placement. I would much rather go into battle with a guy who practices 15,000 rounds a year using generic 55 gr FMJ out of his old M16A1 than with some guy that has the latest state-of-the-art ammo and rifle, but only shoots 500 rounds a year. If you need to delve into the arcane subject of agency ammunition selection, below are the state of the art choices in .223/5.56 mm:
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For general purpose combat use with 1/7 twist barrels from 0 to 600 yards, I would choose one of the combat proven 5.56 mm (ie. 5.56 mm NATO pressure loads, not .223 SAAMI pressure loads which run about 200 f/s slower) heavy match OTM loadings: either the Hornady 75 gr TAP (#8126N) using the OTM bullet w/cannelure or the equally good 77 gr Nosler OTM w/cannelure loaded by Black Hills, followed by the 77 gr Sierra Match King OTM-which, while exceedingly accurate, offers slightly reduced terminal effects. If your expected engagement scenario is at more typical LE distances, say out to 200 yards, then the .223 SAAMI pressure loads are fine. The experimental BH loaded 100 gr OTM exhibits impressive fragmentation, even at relatively low velocities, however, their trajectory is like a rainbow-definitely for use under 150 - 200 yards.
NOTE: For general purpose LE use, if stuck with 1/9 twist barrels, the heavy 70+ gr match OTM loads are not universally accurate in all rifles and the 69 gr SMK OTM, the 68 gr Hornady OTM, the Winchester 64 gr JSP (RA223R2), or one of the new Federal 64 gr TRU (223L) JSP, Hornady 60 gr JSP, or Nosler 60 gr Partition JSP's are the best choices to most likely run accurately in the majority of 1/9 twist rifles. You are screwed with 1/12 twists, I would probably choose the 55 gr Federal bonded JSP load (Tactical--LE223T1 or identical Premium Rifle--P223T2) in order to ensure adequate penetration.
The best LE .223 loads for intermediate barrier penetration are the 62 gr Federal bonded JSP Tactical (LE223T3) and the similarly performing 55 gr Federal bonded JSP load. The Swift 75 gr Scirocco bonded PT and 60 gr Nosler Partition JSP bullets are also good choices. None of the OTM bullets, even the heavy 75 - 100 gr loads, offer good performance through automobile glass. FWIW, contrary to what many believe, 62 gr M855 FMJ also is not very good against glass. For military use, the M995 AP is the best choice for vehicles and glass.
If a short barreled 5.56 mm weapon, such as the Colt Commando, LMT/Crane Mk18 CQBR, HK416, HK 53, HK G36C, etc… is used with a 1/7 twist barrel, the 75 gr Hornady OTM, 77 gr Nosler OTM, 77 gr SMK OTM, and 100 gr BH OTM loadings offer acceptable performance, as do the LE Fed 55 or 62 gr Tac bonded JSP's and the 60 gr Nosler Partition JSP bullet; for LE with a 1/9 twist, stick with the Fed 55 or 62 gr Tac bonded JSP's or the 60 gr Nosler Partition JSP bullet. Remember, with barrels under 14.5”, the effective engagement distance is significantly reduced compared to the longer barreled carbines.
(Note: We are in the process of testing the .224 Barnes TSX all copper bullets--they appear to have good potential; if these preliminary results hold true through the conclusion of testing, then they will also be on the recommended list)
Whatever projectile is used, it is best with a cannelure to prevent bullet set-back in semi-auto/auto weapons. Also, be cautious with the exposed lead on the JSP designs. Often they will run great for up to 200-300 rounds, but then mysterious feeding failures will begin as a result of lead build-up on the feed ramps. I have personally seen this occur with a variety of JSP's including 55 gr, 60 gr, and 64 gr in a recent LE training course. As soon as FMJ or OTM was substituted, all the feeding failures ceased.
Be sure to watch your ammo storage conditions. Temperatures above 150 deg F will degrade the powder and cause pressure spikes. Hint: Think locked metal conex containers in the mid-east, car trunks in the southern U.S., and storage areas near heaters in the northern U.S. Also be cautions of leaving a round in a very hot chamber; besides the obvious danger of a cook-off, the powder can also be damaged by the heat, leading to dramatically increased pressures when the round is eventually fired.
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Most LE agencies around here use the Hornady 75 gr TAP OTM, Federal 55/62 gr bonded Tactical JSP, or Winchester 64 gr JSP (it is on the state contract and is VERY inexpensive)--all have worked very well in actual officer involved shootings. I carry the Hornady 75 gr OTM (SAAMI load) in 30 rd mags and a few 20 rd mags of Federal Tactical 62 gr JSP for barrier situations.
Do short barrel 5.56 mm carbines have some limitations? Yes, especially beyond 100 yards, but BFD…learn what they are, train, and drive on. For LE urban work with lots of entries and mounted work I use a 10.5” LMT CQB-R w/Aimpoint and Noveske KFH because, despite the ballistic compromise, for the mission it is the best choice. For GP/Patrol I carry a 16” with an Aimpoint and 3x magnifier in a LaRue LT649 (a 3.5x TA11 ACOG or S&B 1.1-4x Short Dot are also good choices) -- pick the right tool for the job.
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Mk262 using the 77 gr SMK OTM is built as premium quality ammunition intended for precise long-range semi-auto rifle shots from the Mk12. It is great for its intended purpose and in the military is the best currently readily available option to increase terminal performance with all 5.56 mm carbines. But Mk262 is NOT necessarily the best choice for LE or most military combat use from carbines (Mk18, HK416, M4, FN Mk16 SCAR-L), as Mk262 has demonstrated poor intermediate barrier performance, the inconsistent yaw cycle exhibited by all SMK’s, incomplete water proofing, fragile shelf-life in extreme temperatures, and high cost.
As articulated by recent military testing, what is urgently needed is a JAG approved, law of land warfare legal, environmentally robust, thermally stable combat rifle load with improved terminal performance, yet without the need for the 600+ meter precision accuracy of Mk262 in the Mk12. Such a carbine combat load needs to have a crimped and sealed primer, sealed case mouth, cannelure, acceptable accuracy out to 300-400 meters coupled with good soft tissue terminal performance (early consistent yaw, good fragmentation, at least 12 inches of penetration coupled with maximized tissue damage during the first 10 to 12 inches of travel in tissue, along with being “blind to barriers” and not suffering terminal performance degradation through intermediate barriers--especially automobile windshields & doors, and common structural walls.
Until recently this goal seemed impossible, however “Barrier Blind” ammunition requirements from multiple organizations, including the FBI, USMC, NSWC Crane/USSOCOM, & JSOC have yielded several options from industry that appear to effectively address this issue. For example, see the 01 June 2006 Marine Corps RFI (http://www.cbd-net.com/index.php/search/show/1087257) for “Barrier Blind” ammunition.