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Biden Admin’s Decision To Send New Tanks To Ukraine Offers Huge Payout To Defense Contractors

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• The Biden administration’s decision to send new M1 Abrams to Ukraine instead of moving excess tanks out of storage or refurbishing those operated by partner countries adds to defense companies’ revenues related to the Ukraine war.
• Each tank costs more than $10 million to produce.
• “We just do not have these Abrams available in our stocks to give the Ukrainians at this time,” DOD Deputy Press Secretary Sabrina Singh said Thursday.

The Biden administration’s plan to send Ukraine 31 tanks built from scratch could shape up to be a huge payout for defense contractors, even as political considerations complicated the final decision.

President Joe Biden authorized the delivery of 31 M1 Abrams main battle tanks in more advanced, expensive M1A2 configuration for Ukraine Wednesday, apparently as a condition of Germany supplying its own tanks. While the Department of Defense (DOD) has remained tight lipped on the details of the agreement and the discussions leading up to it, sourcing new A2s from the production lines rather than drawing from the hundreds of both A1 and A2 versions among existing U.S. stocks or those belonging to partner nations involves additional contracts for big defense firms.

“I can see where some may argue that the tank is still a centerpiece of modern ground warfare and suggest that we don’t have enough of the most modern variants,” namely the A2, Lt. Col. Daniel Davis, a fellow at Defense Priorities, told the Daily Caller News Foundation. “Certainly the defense contractors will make this case, as it will greatly expand their bottom line.”

General Dynamics produces the Abrams tank system, according to Army Technology. Raytheon Technologies — on whose board Secretary of Defense Lloyd Austin sat during his nomination — produces several components for the tank, Honeywell makes the engine and General Electric, Northrop Grumman and a handful of foreign companies produce additional parts.

A market survey for “Abrams Tank Systems” opened on Jan. 24, the solicitation page on the U.S. government’s system for managing contract awards shows. The survey solicits information about a company’s ability to produce “Abrams M1A2 System Enhancement Program Version 3 (SEPv3) and Abrams M1A2 System Enhancement Program Version 4 (SEPv4),” the latter of which are a new system that has not been fielded yet.

A new notice seeking information on the Abrams’ commander’s sight, a component Raytheon produces, was also posted on Jan. 20.

In 2018, the Army awarded a $3.6 billion contract to upgrade 800 existing A1s to the A2 configuration, equaling roughly $450,000 a piece, Defense Daily reported. That’s compared to the more than $10 million per unit costs to build new ones, according to Reuters.

The companies are already starting to see dividends from accelerated DOD contracts related to backfilling U.S. stocks or producing new equipment as part of the $27 billion in security assistance the U.S. has devoted to Ukraine.

The U.S. has acquired 3,273 M1A1s since 1980, and 600 M1A2s produced between 1996 and 2001, according to Army Technology, although it isn’t clear how many are combat ready or could be easily made so. Included among those tanks are 452 previously operated by the Marine Corps, which officially deactivated all of its tank battalions in 2021, the Marine Corps Times reported.

Some divested Marine Corps tanks have been transferred to Sierra Army Depot, where they sit in storage awaiting upgrades for the Army, according to a statement from the Corps. They were scheduled to transfer to the Army by sometime in 2023, the Marine Corps Times reported.

“It’s not about delay. We just do not have these Abrams available in our stocks to give the Ukrainians at this time,” DOD Deputy Press Secretary Sabrina Singh said Thursday in response to questions regarding why the U.S. could not draw from the Marines’ unused tanks, instead opting to procure new A2s.

Careful we don’t confuse a political argument with a military view. The most effective, battle tested, lethal, and reliable main battle tank in the world is the US M1A2 upgrade. We have 1500. MULTI FUEL. Gas. Diesel. Jet fuel. 265 mile range. 45 MPH. https://t.co/H9oMnaU3Gr

— Barry R McCaffrey (@mccaffreyr3) January 23, 2023

Other countries maintain Abrams fleets, including tanks in the A1 configuration and those that have been upgraded to the A2 system, according to Army Technology. U.S. officials previously suggested to Reuters the tanks could be refurbished for Ukraine.

General Dynamics is currently working to fill an order of A2s for Poland, Politico reported. However, while Poland waits for the A2s to come into production, it is receiving an emergency supply of A1s from the Marine Corps.

The Pentagon likely preferred the A2 version “to make sure Ukraine has some of the most survivable and lethal tanks to cause the most harm to Russia and have the best chance to avoid destruction,” Davis told the DCNF.

A2s used by the U.S. are also outfitted with depleted uranium armor, but not those operated by other countries who operate the tanks because the technology behind the armor package is classified and under an export ban.

While Ukraine will receive the M1A2, the tanks will come without the sensitive armor, according to Politico. Any U.S.-operated tanks sent to Ukraine would need to be stripped of sensitive equipment, the outlet reported.

General Dynamics, Raytheon and the Pentagon did not immediately respond to the DCNF’s request for comment.