The eight-year deal calls for putting together a concept for the so-called kinetic energy interceptor designed to destroy ballistic missiles in their boost phase, or three to five minutes after launch.

This ground-based interceptor features a design that used to be prohibited under the now scrapped 1972 Anti-Ballistic Missile Treaty with Russia, according to defense officials.

The United States formally withdrew from the treaty in June 2002, despite protests from Moscow.

"The objective of the contract award announced today is to develop and test a land-based interceptor for use in a 'layered' ballistic missile defense system, possibly in 2010-2012," the Pentagon said in a statement.

The weapon will consist of a mobile launcher built mainly by Northrop Grumman, Raytheon-built interceptor missiles, a battle management and communications system, and satellite receivers necessary to process information about hostile missile launches, according to industry officials.

The equipment is highly mobile and can be easily loaded onto a C-17 transport aircraft and taken to any flash point of the world.

"We are proud of this contract win, which firmly establishes Northrop Grumman's position as a top-tier systems integrator for missile defense," said Ronald Sugar, Northrop Grumman's chairman and chief executive officer.

While the initial interceptor would be land-based, defense officials hope the concept of the weapons will quickly evolve to allow its basing aboard ships to enhance the US capability to deploy them to threat areas.

The Bush administration has long insisted a national missile defense system was necessary to counter threats coming from unfriendly nations such as Iran and North Korea that feverishly working to boost their missile arsenals.

The United States is also developing and testing a ground-based system designed to intercept long-range missiles in their mid-course flight and is expected to begin deploying them next year.

Ship-based Aegis missile defenses are expected to become operational in

WAR.WIRE