Few details of the arrangement have been disclosed, although the Pentagon's Missile Defense Agency, said it emphasized "the continued commitment of the United States to the defense of Israel."
Over the last decade, the Pentagon has provided large amounts of funding for the high-altitude Arrow anti-ballistic missile system and the recently deployed Iron Dome system designed to shoot down short-range rockets used by Hezbollah and Hamas.
However, the agreement regarding David's Sling, which is being developed by Israel Aerospace Industries and the U.S. Raytheon Corp., follows a string of major deals with the Pentagon that provide Israel with advanced fighters, massive amounts of fuel and defense funding.
Washington provides Israeli with some $3 billion in military aid annually and there's always some project in the pipeline.
But the deals unveiled in recent weeks indicate they could be linked either to rewarding Israeli for its acquiescence in not opposing an unprecedented $60 billion arms deal with Saudi Arabia, ostensibly to counter Iran, or to prod the Jewish state into making concessions to the Palestinians under President Barack Obama's new Middle East peace initiative.
To get the planned sale of advanced combat aircraft and helicopter gunships for Riyadh through the U.S. Congress, where the Israeli lobby has thwarted such ground-breaking arms sales to Arab states in the past, Obama's administration had to pledge not to provide the Saudis with long-range precision weapons that Israel complains could threaten it.
The United States has never committed to such an expensive arms buildup for an Arab ally before.
But the huge arms deal reflects a significant change in U.S. strategy in the region by confronting Iran through allies and proxies rather than deploying American forces already stretched thin in Iraq and Afghanistan.
The fear is, of course, that far from persuading Iran to back off its alleged quest for nuclear weapons, these deals will only make it feel less secure and reinforce its effort to become a nuclear power.
Whatever, Israel has benefited considerably. These deals will ensure that it retains its traditional technological military edge over its adversaries, despite the festering rift between Obama and Prime Minister Binyamin Netanyahu over settlements expansion.
In recent weeks the U.S. administration has approved the sale of 20 F-35 stealth fighters, the world's most advanced combat jet, to Israel with the $2.75 billion bill being covered by the Pentagon in the form of military aid.
That means the Israelis essentially get the fifth-generation fighters for nothing, plus contracts worth up to $1.5 billion going to Israel's high-tech defense industry to provide components for the F-35.
It also means the Israelis get to maintain their air superiority over their adversaries since the F-35, even in such limited numbers, is a generation ahead of anything the Americans sell the Persian Gulf states.
The Israelis eventually want 75 of these radar-evading jets.
In July, the Pentagon forked out $422.7 million to fund a dozen batteries of the Iron Dome system, built by Rafael Advanced Defense Systems, as well as to expand production of ISI's long-range Arrow-3 system, designed to shield Israel from Iran's ballistic missiles.
The development of the Arrow has cost around $3 billion over the last decade, the bulk of the funding came from the United States.
On Aug. 6, the U.S. Defense Security Cooperation Agency informed Congress it planned to sell Israel a vast amount of fuel for an estimated $2 billion.
The sale comprises 60 million gallons of unleaded gasoline and 100 million gallons of diesel fuel for Israel's ground forces and 284 million gallons of JP-8 aviation jet fuel "to enable Israel to maintain the operational capability of its aircraft inventory."
The threat of a nuclear-armed Iran has changed many of the realities in the Middle East and its volatile environs. Saudi Arabia and Israel have found themselves linked by their deep fears of a nuclear-armed Iran.
This hardly makes allies out of these longtime foes. But, in a changing world, the Israelis appreciate the more able Saudi Arabia and its gulf partners are to stand up to Iran and support U.S. forces in the region, the better they will all be.