This is what I just found on an online dictionary:

damp squib
noun Racing a horse or dog that starts well but finishes terribly. Also, squib.

I'd never heard of the damp squib. Is this racing term the one to which you were referring? This definition doesn't look like a military term. (I'll go look up the URL now...)

http://macquariedictionary.com.au/p/dictionary/slang-d.html