FARNBOROUGH, England (Reuters) - Lockheed Martin Corp on Tuesday said it expected Europe's MBDA to submit a proposal for a new $4.5 billion missile defense system to the German defense ministry fairly soon, paving the way for negotiations with the government.

Rick Edwards, who heads Lockheed's missiles and fire control business, told Reuters that he expected project partner MBDA to complete the proposal - which includes work by Lockheed and many other suppliers - by the end of the month or early next month.

The outlook follows comments in a German defense ministry document that negotiations with Lockheed and MBDA on the system might not finish by a year-end target, a position rival Raytheon Co seized on as a sign the program was running into trouble.

"The proposal will get in fairly soon," Edwards said at the Farnborough International Airshow.

He said he met with a senior German official on Tuesday at the airshow to discuss the issue and negotiations would start once the proposal was submitted.

Edwards said it was possible that contract negotiations with the German government about the Medium Extended Air Defense System, or MEADS, could slip into early next year, as suggested by the German defense ministry document.

But he said lawmakers could still approve the deal as long as it was done in the first three months of the year, before the German national election cycle kicks off in earnest ahead of the September vote.

"I think it’s important that it get done by the first quarter of next year before we get into the German election cycle," Edwards said. "But as much as I want to be under contract by December, I don’t think there’s anything magic about (that date)."

Raytheon, maker of the rival Patriot missile defense system, said the comments in the ministry document were a sign parliamentary approval could slip until 2018 and it still hoped Germany's decision to buy the MEADS system instead of Patriot could be reversed.

MEADS would be one of the first big arms programs to fall under new German acquisition laws, which would complicate discussions about an already complex program. But Edwards said that had been clear to the companies involved for some time.

He said Lockheed was supporting MBDA as it finalised the MEADS proposal, and the recent departure of MBDA Managing Director Thomas Homberg for health reasons should not affect the process.

(Reporting by Andrea Shalal; Editing by Andrew Hay)