If it would harm an existing business to sell guns or parts, then should we be selling Garands at all? Or the 1911's?
This is where the discussion veers into which voter group we are catering to, and who's agenda. There's been little opposition in the past to selling surplus military guns of the US, it could be said that the earlier CMP sales of 1911's are what actually created the market that exists today. If not for those inexpensive parts available to gunsmiths to alter, we'd likely have seen slower growth of the modified 1911's in competition as the parts would have been all new and more expensive. That would impact the competitor and also the aftermarket buyer. If the introductory guns of the sport were more expensive then fewer people would get into it, and that would have a negative impact to this day - there would be less demand for the import guns we see tricked out with all those parts that were based on cheap altered government parts of yesteryear.
The government subsidization of production in AR parts, along with the ammunition, is what creates the lower prices that make the firearm affordable. Without that there would be an incremental difference in popularity. While Lake City doesn't surplus ammo directly, the pulled bullets and cases are on the market as components which are much cheaper due to volume production. Having government contractors sell their parts does, too, as it spreads the costs of equipment and puts less of it into each part.
Selling off the surplus firearms actually builds demand which then grows the market - if no Garands had been sold would we have the manufacturers we do currently making new walnut stocks, or Criterion barrels? I just got a CMP notice of .308 Garands being offered with a number of newly made replacement parts - if there was a smaller market due to no Garands being offered at all, those manufacturers might not even exist. Even the CMP needs them now to sell what amounts to a pile of parts left over from vetting the poor quality guns left in inventory.
I believe its a much more symbiotic relationship - and just junking the guns into mixed scrap neither suits the shooting industry, shooters, taxpayers, or the makers. Just like a surplus desk or GSA vehicle - we don't scrap them, they are sold off. Even 2 ton military vehicles with no drivetrains are put up for auction and they get buyers, who get them running again - check the Steel Soldiers website. They don't all go to the range as targets - if anything there's far too many.