TEL AVIV – As US missile defense funding to Israel surges, so, too, does the economic benefit to American teams led by Boeing and Raytheon, partners with Israel on joint production of the systems designed to defend against rapidly expanding threats.
Under annually renewable addenda to existing government-to-government agreements, 50 percent of US production funding reverts back to the two American subcontractors and their respective rosters of US-based suppliers, officials and industry executives from both countries said.
In this year's budget approved by House and Senate appropriators, that will translate into nearly $100 million for Boeing, partners with Israel Aerospace Industries (IAI) on the Arrow-2 and upper-tier Arrow-3 programs against the heaviest and most advanced Shihab-class ballistic missiles from Iran.
It also means that Raytheon Co., partners with Rafael Ltd. on the war-proven Iron Dome and the soon-to-be-operational David's Sling, stands to gain a similar amount for production work on the two other distinct layers of Israel's multi-layered intercepting network.
According to congressional documents for fiscal year 2017, House and Senate appropriators approved $62 million for Iron Dome and $266.5 million for David's Sling, which includes $150 million in production funding. Raytheon and its team of US suppliers are expected to receive half of production funding appropriated for the two programs.
"Under our agreements with the US, we are committed to true joint production whereby 50 percent of the budget and approximately 50 percent of the work will be done by US companies in America," said Israel Navy Capt. S., head of Upper-Tier Programs at the Defense Ministry's Israel Missile Defense Organization (IMDO).
His full name was withheld from publication for security reasons, in accordance with restrictions set by the Israeli government.
In an Aug. 4 interview, the IMDO official said the sheer volume and growing precision of the missile and rocket threat to Israel demands "continuous and intensive efforts" to improve on existing capabilities.
"We are very grateful for the consistent support received from the US government. We're very happy with the cooperation we enjoy with MDA [the Pentagon's Missile Defense Agency]. … It's essential for us, but also very important to the US economy," the official said.
He added, "Many American workers get up in the morning and make their living from Iron Dome, David's Sling and the Arrow programs. It's not just the major partners – Boeing and Raytheon – but their subcontractors and suppliers spread out over most states of America."
Government and industry sources say Boeing and IAI are about to finalize a new agreement – the latest in their nearly 25-year partnership – to initiate joint US-based production of Arrow-3.
"The agreement will introduce for the first time joint production of Arrow-3 components on US soil," said the IMDO official.
Arrow-3 is a unique, highly maneuverable hit-to-kill exo-atmospheric interceptor that, once deployed, will form the upper-most layer of Israel's multi-layered active defense network. It uses the same Israeli-developed radar and battle management systems that support the operational Arrow-2.
As for David's Sling, the intercepting layer against Scud-class ballistic missiles and long-range, heavy rockets, MoD developers have transferred assets to the Israel Air Force. A declaration of initial operational capability by the service is expected soon.
According to the Israeli official, Rafael and Raytheon are now at the peak of initial production of the system's Stunner missiles and will soon plan to transition into serial builds.
"We are accumulating inventory and planning to ramp up production here in Israel and also in the US, under the management of Raytheon," the official said.
As is the case with Arrow 2, the soon-to-be-launched Arrow-3 and David's Sling interceptors, US production funding for Iron Dome will be split evenly between the Israeli prime and its American partner.
A report released late last month by the Washington-based Center for Strategic and International Studies noted the progressive surge in US missile defense funds earmarked for cooperative programs with Israel.
According to the report, funding for Israel comprised about 1 to 3 percent of the Pentagon's Missile Defense Agency (MDA) budget between the years 1998-2012. By 2014, funding for Israel took up some 9 percent of MDA's budget.
Israel has sustained thousands of rocket and missile attacks in the past decade from Lebanon-based Hizbollah and Gaza-based Hamas. Since Iron Dome was deployed in 2012, the system has been credited with more than 1,500 intercepts.