By Andrea Shalal and Sabine Siebold
BERLIN (Reuters) - U.S. weapons maker Raytheon Co said on Friday it could start upgrading Germany's Patriot missile defense system in about a year if Berlin decides against a rival system built by Europe's MBDA and U.S.-based Lockheed Martin Corp.
Wes Kremer, who heads Raytheon's Integrated Defense Systems division, said the company could also upgrade Germany's Patriot system for less than the estimated cost of the rival Medium Extended Air Defense System (MEADS), made by MBDA and Lockheed,.
Raytheon lost out on the work last year when Germany picked the MEADS system, but the company is keeping close tabs on the defense ministry's slow-moving efforts to hammer out a contract with MBDA.
Sources familiar with the matter say the MBDA's formal proposal for the program came in billions of euros higher than the previous estimate of 4 billion euros ($4.5 billion) when it was submitted in September. Some ministry officials have already raised the possibility of upgrading Patriot given the jump in the MEADS projected cost, the sources said.
"They refer to us as the Plan B," Kremer told Reuters in an interview during a visit to Berlin. "I'm confident we can do it for much less than the MEADS budget."
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Raytheon argues that upgrading the Patriot system would save Germany money in the short and long term, allowing it to continue to benefit from upgrades and reliability improvements funded by all 13 countries that operate the system.
If Berlin stuck with the MEADS system, it alone would be responsible for all such modifications and updates, Kremer said.
"Europe and NATO is about pooling resources and pooling money to work together ... and Patriot really is the epitome of that," he said.
The MEADS system was developed jointly by Germany, Italy and the United States over the last decade, although the U.S. Army later decided not to buy the system for its own use.
The German defense ministry says it is still reviewing the bid submitted by MBDA, jointly owned by Airbus Group, Britain's BAE Systems Plc and Italy's Leonardo Finmeccanica SpA. MBDA has declined to comment.
Kremer said Germany could quickly upgrade the capability of its Patriot system to match upgrades now being carried out by the United States.
Berlin could later acquire a 360-degree radar that is to be developed as part of a separate program for which Raytheon is bidding in Poland. That radar system would take about five years to complete, he said.
MEADS, which is also vying for the Polish work, includes a 360-degree radar system that has already been developed and tested.
Kremer, who met with Polish officials in Warsaw this week, said he remained confident Raytheon and the U.S. government would eventually complete a contract with Poland despite Warsaw's decision to continue talks with Lockheed about MEADS.
He declined to estimate when the agreement could be completed.
Kremer said Raytheon had made good progress in working out arrangements for at least 50 percent of the work to be carried out in Poland. "We are on a path to closure for this," he said.
(Reporting by Andrea Shalal and Sabine Siebold; Editing by Mark Potter)