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updated 3/4/2014 11:51:04 PM ET 2014-03-05T04:51:04

WASHINGTON (Reuters) - The U.S. Missile Defense Agency on Tuesday mapped out plans to overhaul the ground-based U.S. missile defense system managed by Boeing Co and improve its reliability after several test failures in recent years.

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Missile Defense Agency Director Vice Admiral James Syring said the government was requesting about $300 million in fiscal 2015 to redesign the Raytheon Co "kill vehicle" that hits and destroys an enemy missile on contact, add a new long-range radar, and fund other measures to helping the system better identify, track and destroy potential enemy missiles.

The agency's budget request, which must still be approved by Congress, also funds longer-term initiatives to improve the system a decade after what were essentially prototypes to be rushed into operational use.

Overall, the budget requests $8.5 billion for missile defense, including about $7.5 billion for the Missile Defense Agency. Missile defense is one of the biggest items in the Pentagon's annual budget, although Republicans have faulted the Obama administration for scaling back funding in recent years.

Defense Secretary Chuck Hagel said the budget, which was shaped by a major review of defense strategy, underscored the continued importance of missile defense, along with space, cyber and special operations, giving rapidly emerging threats.

Syring said the Bush administration's decision to deploy the fledgling missile defense system in 2004 was aimed at countering "a very real threat," but it cut short systems engineering and testing of the system. A slower process would have avoided some of the problems seen now, he said.

Pentagon acquisition chief Frank Kendall told a conference last week that the reviews of the program had revealed "bad engineering" on the current system.

Syring said reforms were needed now, especially given Hagel's decision to add 14 more interceptors to the 30 in place in California and Alaska.

"The final step now is to step back ... to now look at this from a bottoms-up design standpoint and not just keep making reliability improvements ... on the margin," Syring said.

He said the goal was to deploy a redesigned kill vehicle, new long-range radar and other measures by 2020. The Pentagon said the new kill vehicle would be built with a modular, open architecture and designed with common interfaces to make upgrades easier, and help broaden the vendor and supplier base.

Syring said decisions would be made soon on how to proceed with the redesign of the kill vehicle, factoring in schedule, cost and price. He did not rule out a competition despite the tight schedule of buying 14 new interceptors by 2017.

"I would not shy away from competition if that was the right answer," Syring told reporters. He said the acquisition plan would help inform plans for buying the new interceptors, something now due to begin in fiscal 2016.

The government's funding of early design work on a new common kill vehicle by Raytheon, Boeing and Lockheed Martin Corp meant the agency could choose from three "viable industry concepts," he said.

The fiscal 2015 budget also continues to fund that work, Syring said, noting that the effort was aimed at developing a kill vehicle that could be used on a ground-based interceptor, a Standard-Missile-3 or some future system.

Syring said a review of a July 5 intercept failure was ongoing but officials were nearing an understanding of the root cause. It was not an issue involving simple quality problems, he said. The next intercept test is planned for this summer.

Riki Ellison, chairman of the nonprofit Missile Defense Advocacy Alliance, welcomed the funding increase for missile defense programs and said efforts to modernize the current system were overdue.

"It unequivocally has to be modernized, redesigned and fully integrated to handle the upcoming advancing threats of Iran, North Korea and others," Ellison said.

The budget also funds a seventh Terminal High-Altitude Area Defense (THAAD) battery built by Lockheed, and 31 THAAD interceptors, as well as 70 new Missile Segment Enhancement missiles built by Lockheed for a cost of $420 million. Raytheon builds the AN/TPY-2 radar used by the THAAD system.

(Additional reporting by Phil Stewart; Editing by Bill Trott, Jonathan Oatis and Ken Wills)

(c) Copyright Thomson Reuters 2014. Check for restrictions at: http://about.reuters.com/fulllegal.asp

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