Defense Minister Amir Peretz's decision to choose a short-range rocket defense system developed by Rafael - Israel's Armament Development Authority - as the system the defense establishment will develop to defend Israel against Kassam rockets has apparently sparked off a new argument between him and Prime Minister Ehud Olmert. Senior officers in the Prime Minister's Office said that Peretz's decision was only a suggestion and that the final decision on the issue will be made only after Olmert conducted consultations on the issue on Sunday and after the new system was debated by the security cabinet. Defense Ministry officials responded by saying that Peretz's decision was not political but was a professional one made after consultations with a team of experts. The Jerusalem Post first reported that Rafael would win the tender in November. The system developed by Rafael and dubbed "Iron Dome" is planned to be capable of intercepting Kassam and Katyusha rockets with a small kinetic missile interceptor and is scheduled to be operational for deployment outside the Gaza Strip and along the northern border within two years. The system's development is valued at $300 million. Defense officials stressed that while the decision was finally made Thursday regarding the type of system the ministry planned to invest in, it was still far from production. At the moment, officials said, the defense budget does not include funding for the project and if it is approved by Olmert the money would need to come from other sources. Other competitors for the contract included Israel Aircraft Industries (IAI), Israel Military Industries (IMI), Lockheed Martin and Northrop Grumman. Over the past month, a committee headed by Shmuel Keren, director of the Defense Ministry's Research and Development Authority (MAFAT), met with representatives of the different companies and viewed presentations on the systems which included rapid-fire artillery guns and laser cannons. The anti-Kassam system is the second anti-missile contract Rafael has won in the past year. Last May, Rafael and US defense conglomerate Raytheon won an Israeli Defense Ministry contract to develop a Short-Range Ballistic Missile Defense (SRBMD). Called "David's Sling," the system operates a "hit-to-kill" missile that is said to be capable of completely destroying incoming medium-range missiles. Israel Aircraft Industries (IAI) and Boeing jointly manufacture the Arrow, Israel's anti-ballistic missile defense system and the only operational defense system in the world. IAI, which also vied for the anti-Kassam contract, is considering continuing development of its program and possible offering it to foreign costumers. IAI's innovative offer was an "inclusive concept" that would have been capable of intercepting short and medium-range rockets. Industry sources estimated that IAI, which manufactures and operates the Arrow as well as Israel's satellites, lost the contract since it entered the race later than the other companies.