Israel’s Ministry of Defense (MoD) has selected Rafael and Raytheon over a competing team of Israel Aircraft Industries and Boeing to develop the newest layer in the nation’s multitiered defensive umbrella against rocket and missile attacks.

Executives from U.S.-Israel teams competing for the estimated $250 million Short Range Ballistic Missile Defense (SRBMD) development program had not received formal notification of the decision as of May 10. However, industry sources here and in Washington confirmed unofficial word from Tel Aviv that the Rafael-Raytheon hit-to-kill approach to destroying incoming targets prevailed over an alternative concept based on the Arrow missile interceptor developed in part by Israel Aircraft Industries.

Arieh Herzog, director of the Israel Missile Defense Office, was scheduled to brief U.S. Air Force Lt. Gen. Henry Obering, director of the Pentagon’s Missile Defense Agency, on the Israeli decision at a May 12 meeting in Washington. A formal MoD announcement is expected following that meeting, sources here said.

“Unless the Americans come back with objections, which is highly unlikely, responsibility for developing this new interceptor will go to Rafael and its U.S. partner,” said an Israeli source involved in the program. According to the source, both teams proposed cost-effective solutions estimated at some $200,000 per copy and scored similar points in terms of manufacturing, quality control and program management capabilities.

“The discriminator here was technical. … The Rafael approach is something [MoD’s Defense Research and Development Directorate] hopes to leverage for other programs, particularly in the air-to-air realm,” he added.

MoD spokeswoman Rachel Naidek-Ashkenazi said the SRBMD selection process was not yet finalized. She declined to provide further details pending an official announcement.

Officials for the bidding companies declined comment prior to receipt of the MoD announcement.

Aimed at defending against missiles with ranges from 40 kilometers to about 200 kilometers, the planned SRBMD effort has assumed greater urgency due to escalating tensions over Iran’s purported nuclear weapons drive. According to U.S. and Israeli sources associated with the program, the Rafael-Raytheon interceptor and its attendant Israeli-developed ground-based radar promise an effective defense against the thousands of Iranian-made missiles deployed along Israel’s northern border.

In a May 9 address at Israel’s Fisher Institute for Air and Space Strategic Studies, Amos Gilad, director of the Israeli MoD’s political-military directorate, said the estimated 13,000 to 15,000 rockets and missiles deployed by Iranian-backed and Syrian-supported Hizbollah forces in southern Lebanon represents an extension of Tehran’s power-projection capabilities.

“These rocket-launching capabilities deployed by proxy forces at our northern front must be considered as a strategic arm; another means of power projection for Iran,” said Gilad, a retired Israel Defense Forces major general.

He said Iran also is supporting efforts by the Palestinian Hamas organization to develop extended-range rockets capable of striking strategically critical sites in Israel. “So far, we are not allowing them to make progress, but this is their goal,” said Gilad. These shorter-range rocket and missile threats, combined with what Gilad described as Iran’s resolute intent to equip its Shihab ballistic missiles with nuclear warheads, threaten not only Israel, but U.S. and Western forces and their allies throughout the region, he said.

In anticipation of yet another potential Iranian threat, the Israel Missile Defense Organization recently introduced a requirement that the planned SRBMD system be capable of intercepting slow-moving cruise missiles. While MoD officials declined to elaborate on intelligence driving the new requirement, analysts here suspect Iran is developing an indigenous, nuclear-capable cruise missile based on the Russian-built Kh-55, known by its NATO designation as the AS-15 Kent.

While the exact contract amount and duration of the initial design phase remains to be determined, U.S. and Israeli sources associated with the SRBMD program expect full-scale development to extend beyond 2010, at an estimated cost of up to $300 million. Sources from both countries emphasized that transition of the SRBMD effort to a full-scale development program is highly dependent on continued and progressively increased levels of funding support from the U.S. government.

Meanwhile, the MoD is seeking $25 million from the U.S. Congress in 2007 to support continued funding of the SRBMD initial design phase.

In parallel, MoD intends to allocate matching funds to the SRBMD effort from its own Defense Research and Development Directorate, sources here said. They noted that MoD already is underwriting through its own national funds development of a new radar to provide fire control for the planned SRBMD interceptors.

Initiated in March 2005 as an 18-month risk-reduction study, the SRBMD system would serve as the bottom layer of Israel’s multitiered active defense network, intercepting rockets and missiles whose ranges are well below the class of Scud and Shihab threats, which the U.S.-Israel Arrow was designed to destroy.

With the Arrow at the high end of the missile defense shield, the low-end SRBMD program would sandwich U.S.-supplied Hawk and Patriot PAC-2 missile batteries now deployed by the Israel Air Force to defend against aircraft and older versions of Scud-class missiles.

Uzi Rubin, a former director of the Israel Missile Defense Organization and an early supporter of the SRBMD effort, cautioned that the new interceptor should be integrated into Israel’s overall Arrow-based missile defense network. ” If, indeed, the Rafael-proposed interceptor was selected, it must not be used as a cornerstone for a new system. It must take advantage of the system engineering, laboratories, and command and control capabilities already developed through the Arrow weapon system,” Rubin said.

Despite its focus on the low-end class of threats, the SRBMD system will not be designed to defend against ultra-short-range threats like the Qassem, a crude rocket used by Gaza-based Palestinian militants as a form of asymmetric warfare against Israel. In a briefing to reporters here in March, MoD Director-General Jacob Toren clarified widely held misconceptions that the SRBMD program would address the chronic irritant posed by Palestinian Qassem launches into Israel.

“The Qassem is a psychological weapon, not a strategic weapon… That doesn’t mean we’re not concerned and that we don’t need to invest more in finding cost-effect means of dealing with the Qassem. But this is not the class of threats that will be addressed by the SRBMD program,” Toren said.