ANKARA—The Turkish government has officially launched a competition for the upgrade of a batch of 200 German- and US-made battle tanks in the army's inventory, a contract that analysts estimate to be worth roughly $500 million.

Five Turkish companies placed their upgrade bids on Jan. 23. The local bidders are: military electronics specialist Aselsan, Turkey's biggest defense company; missile-maker Roketsan; and armored vehicles manufacturers BMC, Otokar and FNSS. Aselsan and Roketsan are state-controlled companies; BMC, Otokar and FNSS are privately owned.

Some industry sources were surprised by bids from a military electronics specialist and a missile maker. "Normally these companies should have been subsystem producers," said one source.

The upgrade program will be administered by Turkey's procurement agency, the Undersecretariat for Defense Industries (SSM). It will involve modernization work on 40 M60A3, 40 Leopard II A4 and 120 M60T tanks.

In the mid-2000s, under a 2002 contract, Israel Military Industries had upgraded a batch of 169 M60s now designated in the Turkish inventory as M60Ts. The official contract price for the deal was $688 million but the actual figure went beyond that.

A procurement official familiar with the new program said that the backbone of the upgrade program would be armor improvements and installing "active protection systems" on the bodies.

The program comes with a "priority" tag after several Turkish battle tanks have been hit by Islamist radicals during the Turkish military's incursion into Syria. "Improvements are required for better protection against anti-tank weapons," said one military officer.

Although the upgrade program is structured as a local contest most business in the contract may involve foreign suppliers, industry sources say. "This program is based mainly on advanced technology for protection systems and better armor, which are typically foreign technology," said one source.

The Turkish government retains the right to split the program. It can award different tank upgrade work to different contenders. SSM is expected to conclude the bidding this year.