They seem to shoot well, but suffered from having a few part limitations which I think turned most people away.
Their magazines were a well known weakness in the system for years, with bending feed lips and other problems. The AICS magazine is far superior, so their use of a proprietary, less robust system led many away from them.
The stock, again proprietary, is not the best choice for many people. Is it bad? No, just not ideal.
With the ability to have a gun built by a custom builder with the best components in the industry, there was not as much interest in the HS Precision product for many. For factory built rifles, the AI and TRG are generally considered superior in terms or durability and are easily equal in accuracy.
I have shot several HS Precision rifles. They all shot well, but I would not buy one instead of one of my GAPs or AIs.
As for the "good enough for the FBI/military" argument....well that just doesn't hold any water in many cases.