Sub2000 hasn't been issued because...
Kel-Tec hasn't jumped through all the hoops that modern US law enforcement agencies demand. Ruger apparently builds their PC carbines to meet Nat'l Institute of Justice(NIJ) and NATO acceptance specs, and the Maine State Police and Anchorage, AK PD(maybe?) have adopted the Ruger carbines. Kel-Tec won't really be able to pursue LE contracts unless and until they show that the Sub2000 meets the same NIJ acceptance criteria, and start promoting same to the LE community - without official departmental adopton, the only way an officer could field the gun would be as a privately-owned, department-approved(PODA) weapon.
And, yes, the folding feature on the Sub2000 has practically no application for a cruiser-stored patrol carbine. However, it COULD be useful as a longarm for motorcycle/bicycle officers, which could be stored in an appropriately-sized saddlebag and fed from the same magazine pouch already on the officer's duty belt. For that matter, horse-mounted officers(what few there are left) could also carry the Kel-Tec in their saddlebags when patrolling the urban wilds - rural patrol or SAR needs would be better-served by a rifle-caliber longarm.
I've found that my Sub2000 fits quite nicely into a nylon briefcase/laptop carrier, which makes it viable as a "concealed-carry carbine" for plainclothes personnel on anti-crime detail or who may be seeded in the crowd during high-risk public gatherings. Detectives and investigators could carry the Sub2000 in the same briefcase they use for their paperwork, in the event they have to use it as a "come as you are" entry weapon for a short-notice building search or warrant service.
Another strong prospect is to arm School Resource Officers with the Sub2000, carried in the same shoulder tote or briefcase that they hand out D.A.R.E. literature from. In the event of a Columbine-type scenario, an SRO might find this carbine invaluable for neutralizing an active shooter from across a football field, or from one end of a 50-yard corridor to the other. A big plus here is the fact that the carbine only weighs 4lbs, which helps keep the officer's tote bag from being burdensome or suspiciously heavy.
According to Deputy Dan Goodwin in the May 2002 G&W/LE, the Rutherford County(TN) Sheriff's Dep't. issues the Ruger PC40 to its general detectives, interdiction officers, patrol supervisors and SRO supervisors - if Kel-Tec would market the Sub2000 more aggressively to LEOs, they could take a big share of that market with a gun that's lighter and handier than the Ruger, stores in a more discreet and compact envelope, and uses the exact same ammo and magazines as the officer's duty sidearm.