In 1999, SOCOM requested Black Hills Ammunition to develop ammunition for the Mk 12 SPR that SOCOM was designing. For the rifle to be accurate out to 700 yards, Black Hills "militarized" a cartridge that used the Sierra 77 grain OTM (Open Tip Match) projectile; it switched from a .223 Remington to 5.56 mm case, increased pressure loading, crimped and sealed the primer, and added a flash retardant to the powder. The Mk 262 Mod 0 was adopted in 2002. Issues came up in development including reliability problems in different temperatures and when the weapon got dirty, and cycling issues in cold weather due to the slightly shorter barrel of the SPR compared to the full-length M16A2 barrel. The problems were addressed with a slower burning powder with a different pressure for use in the barrel, creating the Mk 262 Mod 1 in 2003. During the product improvement stage, the new propellant was found to be more sensitive to heat in weapon chambers during rapid firings, resulting in increased pressures and failure to extract. This was addressed with another powder blend with higher heat tolerance and improved brass. Also during the stage, Black Hills wanted the bullet to be given a cannelure, which had been previously rejected for fear it would affect accuracy. It was eventually added for effective crimping to ensure that the projectile would not move back into the case and cause a malfunction during auto-load feeding. Although the temperature sensitive powder and new bullet changed specifications, the designation remained as the Mod 1.