In February 2001, GDLS were contracted to supply 240 M1A2 tanks with a system enhancement package (SEP) by 2004. The M1A2 SEP contains an embedded version of the US Army's Force XXI command and control architecture; new Raytheon commander's independent thermal viewer (CITV) with second-generation thermal imager; commander's display for digital colour terrain maps; DRS Techologies second-generation GEN II TIS thermal imaging gunner's sight with increased range; driver's integrated display and thermal management system.

The US Army decided to cancel future production of the M1A2 SEP from FY2004, but in June 2005 ordered the upgraded of a further 60 M1A2 tanks to SEP configuration. A further 60 were ordered in August 2006, and 180 in November 2006.

Under the firepower enhancement package (FEP), DRS Techologies has also been awarded a contract for the GEN II TIS to upgrade US Marine Corps M1A1 tanks. GEN II TIS is based on the 480×4 SADA (standard advanced dewar assembly) detector.

The FEP also includes an eyesafe laser rangefinder, north-finding module and precision lightweight global positioning receiver which provide targeting solutions for the new far target locate (FTL) function.

FTL gives accurate targeting data to a range of 8,000m with a CEP (circular error of probability) of less than 35m.

In November 2007, General Dynamics was awarded a contract for the upgrade of 240 M1A2 SEP version one tanks to the version two configuration which has improved sights, displays and a tank-infantry phone. The first was ready in October 2008 and the work was completed in September 2009.

In 2008, Saudi Arabia awarded a $58m contract to GDLS to design, develop, convert, implement and test a hybrid configuration of the M1A1, M1A2 and M1A2 SEP tank variants. The work is expected to be complete in March 2012.

In February 2008, General Dynamics was awarded a multi-year contract to upgrade to SEP Version Two (V2) configuration the remaining 435 M1A1 tanks in the US Army inventory. A $614m contract to upgrade 235 M1A1 Abrams main battle tanks to the SEP V2 configuration was awarded in August 2008. The remaining 180 tanks will be upgraded at a later date.