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U.S. approves final-year funding for Lockheed Martin missile system

U.S. Secretary of Defense Chuck Hagel gives a speech on fiscal defense spending at Ft. McNair in Washington April 3, 2013. REUTERS/Gary Came
U.S. Secretary of Defense Chuck Hagel gives a speech on fiscal defense spending at Ft. McNair in Washington April 3, 2013. REUTERS/Gary Came

WASHINGTON (Reuters) - Defense Secretary Chuck Hagel has told his German and Italian counterparts the Pentagon plans to spend about $310 million to help fund the final year of development of Lockheed Martin's MEADS missile defense system, a spokeswoman said on Tuesday.

The funding, included in the 2013 defense appropriation passed by Congress last month, aims to help bring the program to a close and collect the information learned so it can be used in the future, Pentagon spokesman Maureen Schumann said.

The final year's development work includes an intercept flight test against a ballistic missile target in late 2013.

"Funding for MEADS allows us to fulfill our commitment with our allied participants, the German and Italian ministers of defense, to bring the MEADS development program to a sound and orderly conclusion," she said in a statement.

U.S. lawmakers initially blocked final U.S. funding for MEADS when they passed a bill authorizing temporary military spending late last year, arguing that they did not want to pay any more for a program the Pentagon has decided not to use.

Top U.S. defense officials and their counterparts in Germany and Italy had warned Congress that cutting off funding for the program could cause problems between Washington and its allies, who have spent a combined $4 billion on the program to date, and would have triggered steep termination fees.

The funding was approved last year when Congress passed a full-year bill to fund the government. The legislation included $348 million for the Medium Extended Air and Missile Defense System, or MEADS, designed as a successor to the Patriot missile defense system.

It also included $32.8 million for the Pentagon office running the program, funding that will allow storing data from the development and test program so participants will have a database of design and performance information that can be used in the future.

The funding is subject to a 10 percent cut because, under a U.S. law aimed at curbing the government's deficit spending, the Pentagon will actually provide about $310 billion for the final year of development, officials said.

It also is not guaranteed. The Senate on Tuesday began the process of bringing a bill to the floor that would withdraw funding for the MEADS system.

Lockheed plans to keep working with Italy and Germany on the three-nation missile defense program even after the United States stops participating.

Lockheed says MEADS is significantly cheaper to operate than the Patriot system built by its rival Raytheon Co, and would provide significantly larger coverage areas.

Raytheon has continued to upgrade and modernize the Patriot missile defense system, arguing that the changes have made the system more efficient and less-labor intensive to use.

(Reporting By David Alexander; Editing by Todd Eastham and Doina Chiacu)

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