John R. Myers, general manager of Avco Corporation's Lycoming Division, is remarkably frank about why the U.S. Army is unhappy with his firm, which builds the turbine engines for the new M1 Abrams battle tank.

"The products," he said in an interview, "were produced crappy."

That is history now, Myers said during an interview and tour of the Avco plant here. The production problems are solved, he said, and Avco will begin meeting its contract delivery dates by the end of this month, an assertion the Army confirms.

There is urgency in Myers' sales pitch because the Army wants to find a second supplier for the M1 engine and Avco wants that business for itself.

It's another example of how intense things can get in U.S. industry with a big defense contract on the line. Avco could lose more than $400 million in orders over four years and is attempting to preserve its monopoly both by telling reporters what it is doing to improve production at its World War II-era government-owned factory here and by lobbying in Washington.

Each engine costs about $350,000, and Army projections call for buying 828 engines a year for the four fiscal years beginning in 1985. Army plans also call for shifting production of at least 360 of those engines annually to another company.

The battle is in the House of Representatives, where the Armed Services Committee has voted to forbid the Army from seeking a second supplier. The fight has moved to floor, where it looks like just another pork barrel issue on the military procurement bill.

Four of Connecticut's six congressmen lined up during debate on the bill last month to defend the Stratford plant. "I have visited this facility," said Rep. Bruce A. Morrison (D-Conn.), whose district includes the plant and many of its 5,100 employes, "and it is clear that they are now producing engines of superlative quality."

But Rep. Norman D. Dicks (D-Wash.), leading the fight for a second source, pointed to Avco's slow production record and flawed engines. The Army, he said, has been forced to cannibalize engines from older tanks so new ones could be tested.

"As soon as one guy wins a contract , he puts his thumb in his mouth and we get a bad product," Dicks said. "The only way you can make this thing work is to get competition in the procurement."

Dicks sought to delete the ban on competition, which he called "a very bad provision that was put in the bill to protect a contractor." His proposal would allow competition only if it proves cost-effective.

Undersecretary of the Army James R. Ambrose opposed a ban on competition in testimony before the House Defense Appropriations Committee, according to a transcript furnished by Dicks.

"I don't know what is in the mind of the committee to produce such a proposition," Ambrose said. "After as many times as the same committee, and of course other committees in the Congress, have pressed on us to get competition and to get second sourcing, this just seems a very strange act."

Ambrose declined through a spokesman to comment and it took the Army two weeks to provide written answers to questions about the Avco contract after refusing to provide an expert to discuss it.

The primary purpose of seeking a second source for tank engines, the Army's written answers said, "is to broaden our mobilization base."

Long-term benefits "are delivery stability, price competition and greater assurance of engine production in the event of unforeseen problems such as natural disaster or accidents as well as providing greater production surge capability in the event of mobilization," the Army said.

Three other firms, not identified, have made formal proposals, the Army said. According to congressional sources, the three are the Garrett Corp. of Los Angeles, the Detroit Diesel Allison division of General Motors Corp., and the Pratt & Whitney division of United Technologies, also in Connecticut.

The Army said it plans to award a fixed-price contract with an inflation escalator and will make the award based on several factors, including price and transportation costs..

Avco, one of the nation's larger defense contractors, is prepared to diversify production of the M1 engine into other sites including the Avco plant in Williamsport, Pa., Myers said. That plant has traditionally built piston engines for small private airplanes. Work is needed there because the bottom has dropped out of the pleasure aircraft market.

Further, Myers said, he is certain Avco could meet "surge" requirements if the Army had to speed production. Avco will produce more than 800 engines this calendar year alone, he said, and is running the equivalent of only two shifts in its plant here.

All this means that if the Army stays with Avco, the Army will save between $230 million and $240 million by 1988 through a combination of factors, Myers said. "If they do go second source," he said, "what do I do with all these people, put them on the street? Why lay off a guy in Connecticut and hire one in California?"

Avco says it does not know how many employes would be laid off because the Lycoming Division plant has both civilian and military customers and employment depends on orders from both sectors.

Avco Lycoming has been known for years as a builder of aircraft engines, from small pistons to medium-sized jets. Jet engines built here power several military helicopters, the new four-engine British Aerospace 146 commuter passenger plane, as well as the Canadair Challenger business jet.

British Aerospace says it has been pleased with its Avco products. Canadair recently filed a $109.6 million suit against Avco, charging among other things that Avco has failed to meet its delivery schedule. Avco said in a statement that "Canadair has never submitted Avco with any details to support the claims alleged in this surprising lawsuit, nor with any responses to Avco's substantial claims against Canadair, including those arising from Canadair's drastic unilateral cuts in production . . . "

While the debate over the tank engine seems to illustrate once again the link between pork barrel politics and defense policy, it also shows the difficulty of encouraging competition in an era of complex, high-technology weapons.

The M1 Abrams is the first tank to use a gasoline-fired turbine instead of the traditional diesel engine, and it is a significant change for everybody, from mechanics to tank commanders to Congress.

Advocates say turbines, which revolutionized aviation, are lighter for the horsepower they deliver and more reliable. The M1 engine is built in three modules, each of which can be readily changed, easing field maintenance, Avco said.

The Army said its specifications called for the M1 power trains--engines, transmissions and final drive assemblies--to go 4,000 miles without requiring replacement. In June 1982, after a history of power train problems by no means confined to the Avco engine, the Army started a 30,000-mile power train durability test at the Aberdeen Proving Ground north of Baltimore.

"This test was halted when it became apparent that the turbine engine failure rate was too high to achieve the requirement of the performance specification," the Army said. "Failures included poor welding . . . and seal leaks . . . Analyses of these failures indicated that the root causes were poor process controls and a lack of quality control in the assembly of the engine."

Those are the kinds of problems of which Avco's Myers speaks so frankly. Quality was a problem, he said, because so many people had to be trained so quickly as Avco tooled up to meet the M1 contract. Millions of dollars have been pumped into automated production facilities, robot welders and computerized tolerance gauges. The production line has been reorganized to reduce waste movement and downtime.

The Army, of course, has paid for some of that. It said that it has spent a total of $202.8 million to support M1 engine production and that Avco has invested $42 million in the Stratford plant to support all Army engine programs.

"We've hurt some people, some generals," said Myers. "That's not going to go away. Getting information out to you people is a valuable part of our next year."