The Air Force requested $378 million for further system development and demonstration of its Space Fence space situational awareness program in fiscal year 2014, according to President Barack Obama’s budget request, which was released Wednesday.

Space Fence would be a S-band radar tracking orbiting objects and other debris passing over the United States that could damage satellites. It would replace the Air Force Space Surveillance System (AFSSS), or VHF Fence, that has been in service since 1961.

Raytheon [RTN] and Lockheed Martin [LMT] are the two prime contractors gunning for the Space Fence contract, which is valued at $3.5 billion. The competitors are currently in source selection and, according to Air Force budget documents, the service will award the contract by the end of third quarter FY ’13, which ends June 30.

FY ’14 funds would go to the winning contractor conducting engineering and manufacturing development (EMD), production and deployment activities in support of Integrated System Design (ISD) culminating in a critical design review (CDR). Funds would also go toward system engineering and integration and technical and program support. The winning contractor would also begin construction of the first Space Fence location at Kwajalein Atoll in the Marshall Islands.

The Space Fence program could still be vulnerable to future cuts, despite being included in the budget. Reuters reported Air Force Space Command (AFSPC) chief Gen. William Shelton saying this week at the National Space Symposium in Colorado that Space Fence might not be funded beyond FY ’15, likely due to additional budget cuts. Shelton said the program could be vulnerable to cuts beyond FY ’15 because it was not yet under contract. The Air Force predicted in budget documents requesting $714 million for Space Fence for fiscal years 2015 through 2017.

The Air Force could not respond to a request for comment by deadline.

Space Fence is utilizing a two increment approach. Increment 1/Initial Operational Capability (IOC) will consist of successful operations at the first radar site in the Marshall Islands with Milestone B for Increment 1 also planned for FY ’13. Increment 2/Full Operational Capability (FOC) is planned for FY ’20 and will include completion of the second radar at a location still under negotiations with the proposed host nation. The Air Force has said in the past that the second radar location is contingent on available funding.