Ammo that just barely fails to meet military spec is technically "reject" ammo, it can be good ammo, but there is no guarantee. Often it gets put on the civilian market, along with "Contract overrun" ammo. There are many possibilities, ranging from good stuff all the way to total crap.
Possible cause for split case mouths on firing is "brittle" brass and there are several possible reasons. Age can be one. Cases not made without just the right temper can "age harden" over time. Extreme cases are called "season cracking" and the case can crack in the box without being fired. Pretty rare these days but something to be aware of if you are dealing with very old ammo.
Another thing that can cause it is degradation of the brass due to decomposition of the powder. This is also usually an age related issue, but not always, it can be the result of improper storage.
As the powder decomposes, it releases nitric acid fumes, which attack the brass. There is a point where this can be happening but the rounds will still fire, but some of the brass will crack. As that process continues, you reach a point where some of the will not fire and some will, and, as time goes on the percentage of failures increases until all the ammo goes bad.
Again, this can be caused by less than the best manufacture (of the powder) or it can be the result of storage under conditions that cause the powder to degrade.
I've personally experienced two instances of this kind of thing.
One was with some .45ACP ammo, back in the 70s, and the other with a batch of 7.62 Nato "surplus" ammo back around 2010 or so.
My Dad got some "surplus" .45 ammo back in the 70s no idea who actually made it, it was in GI cardboard boxes, but the cases were Rem-UMC nickel brass, bullets were 230gr RN FMJ, but there was some discoloring of the tips.
That stuff was crap. 1-3 rnds of each magazine would fail to fire, and of those that did many cracked, and cracked severely, many cracked half way to the case head. The ones that didn't crack were fine, and I've still got some of them in my brass stash, having reloaded them numerous times over the years.
The other time, a friend bought some surplus ammo, and as he puts it, "the only time he didn't open and inspect the ammo before taking it home".
7.62 NATO, the headstamp seemed to match Israeli make (not positive about that) dates of 99, 00, and 01 on the case heads. Came in a cardboard box, loose packed inside a plastic bag. The bag was brittle and crumbled to the touch. There was SAND inside with the ammo...(should have been a giveaway right there...
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He had gotten 500 rnds. We test fired 100. 11 failed to fire. 17 fired but cracked, often right above the head. We tossed that all that brass, and I pulled down the remaining 400 rnds.
Several of the bullets had clumps of powder stuck to the base, with whitish and some bluish discoloration. Definitely degraded powder. Tossed the powder, and the cases, kept the bullets, which once cleaned up were fine.
I think that stuff had been "stored" buried in the desert somewhere, then later dug up and boxed for "surplus" sale. Total crap, other than the bullets.
You might consider pulling the bullets from a few rounds and checking the visual appearance of the powder. Something might be going on there, but there's no guarantee it is to the point you can see it.
If it looks bad, it IS bad, but it can look ok and still be on the way to going bad. If you have all the info (lot#, box markings, etc) you can contact PPU and let them know what is going on. IF they ask for it back, send it, and expect a replacement. If they don't give a rip, live with it and stop buying their stuff is about the only option.
If they offer a replacement, take it. If not, shoot it up (its blaster grade stuff, isn't it?) and use the surviving brass for reloading. Might want to anneal the case necks before reloading, though.