The Pentagon and its European partners are reviewing the multibillion-dollar medium extended air defence system (MEADS), an air and missile defence system, amidst the drive to cut costs.

The $16.5bn missile programme has been facing review since its inception in 1995 with serious cost cutting and delays, according to the Wall Street Journal.

According to the terms of the contract, funding would be majorly granted by the US with a share of 58%, with Germany and Italy sharing 25% and 17%, respectively.

The prime contractor for the system, MEADS International, is a multinational joint venture that includes Lockheed and MBDA, a European manufacturer of missiles and missile systems.

The missile, intended to replace the Patriot missile defence system, can protect troops from shorter-range ballistic missiles, low-flying cruise missiles and enemy aircraft.

The project passed a critical design review by a tri-national government team that assessed technical progress in August 2010.

The army has plans to keep the Patriot in service until 2030 as the first MEADS unit is not expected to be equipped until later this decade.