These firms, along with Israel Military Industries, are mulling partnerships with international companies such as Lockheed Martin's Dallas-based Missiles and Fire Control Unit, and Germany's Krauss-Maffei Wegmann and Rheinmetall Defense.
Israeli defense officials said the replacement for the 50-year-old -- and much upgraded -- M109A5 will be the key element in the ground forces' Fire2025 strategic investment plan for a system that's more powerful, has longer range and can be deployed across what the military calls "the operational spectrum."
The Israeli military's general staff is scheduled to announce final approval to launch the program next month.
The Israelis received their first U.S.-built M109s in the early 1970s and it made its combat debut with the Jewish state in the October 1973 war against Egypt and Syria, which Israel won after major setbacks.
Two systems are seen by Israeli defense sources as the main candidates to replace the M109s: Soltam Systems' Autonomous Truck Mounted Howitzer Systems and the artillery gun module, or AGM, developed by Krauss-Maffei Wegmann of Munich, Germany.
Both are truck-mounted with high mobility that allows them to move faster between operational areas than the tracked M109s.
They also have greater range and, possibly more importantly, need only two or three crewmen compared to the six required for the M109.
The U.S. Army plans to stick to a M109 upgrade for its artillery forces and the new version, the 27-ton M109 Paladin Integrated Management System, or PIM, is scheduled to go into production shortly. It will have a crew of three.
This means the Americans plan to rebuild about 60 percent of the existing 900 M109s rather than try to come up with a new design and to use the new GPS-guided Excalibur smart shell that entered U.S. service in 2007.
The U.S. Amy plans to acquire 500 M109 PIMs. Excalibur radically changes artillery operations because the system uses 80 percent to 90 percent less ammunition, which greatly reduces wear and tear on the gun, with less time needed for maintenance.
The U.S. weekly Defense News reports if the Israeli competition secures official approval, it will probably involve an autonomously loaded 52-caliber weapon and 155mm barrel integrated on a refurbished or new, low-cost chassis.
The Israeli military wants the new system to fire smart shells at a rapid rate, using precision-guidance systems developed by Israeli firms, defense sources say.
Elbit Systems has been discussing a partnership for the Israeli upgrade program, but Defense News said it could decide to stay on its own after acquiring Soltam Systems, Israel's leading artillery provider, in 2010.
IMI is reported to have teamed up with Rheinmetall in 2012 to produce a modular upgrade model that seeks to extend Israel's 250 M109 variants in service for 40 years more.
The M10917 "Spark" carries a 155mm/52-caliber L52 cannon that can fire six rounds per minute. The L52 saw extensive combat in Afghanistan.
Defense News said the model proposed by IMI will feature the automatic shell-loading capabilities of the PzH2000, developed by Krauss-Mattei Wegmann and Rheinmetall for the Germany army. It cuts crew numbers from eight to three or four.
State-owned IAI, flagship of Israel's defense industry, is reported to be promoting a KMW artillery gun module integrated on an M270 Multiple Launch Rocket System chassis built by Lockheed-Martin.
IAI declines to discuss its plans or possible partners. Defense News reported that whatever arrangements IMI or IAI may have with German companies will be subject to technology transfer agreements between the Israeli and German defense ministries.
The M109 upgrade will be determined to a large extent by the Israeli military's changing doctrine that shifts away from massed conventional forces, such as large tank formations, to more flexible operations against more nimble adversaries and heavy missile assaults.
For instance, there's been a radical shift in perceptions about artillery operations, particularly since the 2006 war with Hezbollah that ended badly for Israel with a stalemate.
In that 34-day conflict, the Israelis fired some 120,000 155mm shells at Hezbollah bunkers to little effect while 227mm MLRS U.S. rockets with GPS guidance were far more destructive against similar targets in Iraq and Afghanistan.