WASHINGTON — The U.S. Army has awarded BAE Systems a contract potentially worth up to $1.7 billion to build the full-rate production version of the M109A7 Self-Propelled Howitzer and companion M992A3 ammunition carrier vehicles, according to the company’s vice president and general manager of combat vehicles in the United States.

The contract awarded Thursday covers the final lot of low-rate initial production (LRIP) vehicles ― a total of 48 howitzers and 48 ammunition carriers ― for $413.7 million and includes options to buy 60 full-rate production vehicle sets per year for three years following. If all options are exercised, the total contract amount could reach just shy of $1.7 billion, Adam Zarfoss told Defense News.

Under the Paladin Integrated Management (PIM) program, BAE was tasked to field sets of LRIP howitzers and ammunition carriers. When LRIP began, the order covered 65 sets. BAE delivered its first production sets to the Army in the spring of 2015.

To date, according to Zarfoss, BAE Systems has delivered 37 howitzers and 36 ammunition carriers under LRIP. The vehicles were used to complete all production qualification testing, driving toward FRP, he added.

The PIM is the successor to the M109A6 155mm howitzer and continues to use the same gun as the older artillery piece and has the same cab structure. But aside from those similarities, the PIM is essentially a new weapon system, one that comes with digital displays and a 70 kilowatt, 600-volt on-board power system. The new design also allows for the integration of the drive-train and suspension that are common to the Bradley Infantry Fighting Vehicle.

There is one final test to complete ― the Initial Operational Test and Evaluation or IOT&E ― which will determine the Army’s decision to move to full-rate production. The test will take place in the first quarter of next year, according to Zarfoss.

BAE will start fabricating the last of the LRIP systems in the spring and expects the Army to approve full materiel release and equip the first unit starting in the spring or early summer, he added.

Zarfoss noted there have been no major configuration changes between the LRIP version and what will be built during FRP and expects no surprises to come from the IOT&E happening soon.

In the summer of 2016, the Pentagon’s inspector general wrote in a report about the PIM program that he wanted the Army to address what the DoD test community perceived as deficiencies with the howitzer’s maximum rate of fire and problems with the automatic fire extinguisher that could potentially endanger the crew.

In response to that report, Zarfoss said, “they identified some vulnerabilities. We made some changes to sensor location, but the automatic fire extinguishing system remained as part of the vehicle. There have been some tweaks to the breach mechanisms that is a legacy component that the Army is working on to address some issues with the current fleet that is related to PIM as well.”

The new howitzer gets the Army on its path to “real commonality within the formations because our howitzers are going to have the same basic automotive platform as the Bradleys,” Zarfoss said. “And then we are going to follow on this with the [Armored Multi-Purpose Vehicle] that is going to have the same stuff as well so there is some real benefits coming to the Army in terms of not just the tactical implications of this but also logistics.”

Also on Thursday, General Dynamics Land Systems was awarded a $2.7 billion contract from the U.S. Army to upgrade 786 Abrams tanks from the M1A1 to the M1A2 System Enhancement Package Version 3.