The United States has been providing Israel with military funding and collaborating with Israeli companies and defense officials throughout their strategic military relationship. Most recently Israel and the United States have collaborated on the Arrow III defense system, as well as the extremely successful Iron Dome missile defense system. Since 2008 the United States has contributed $374.95 million to the Arrow III missile program, and in the fiscal year 2013 Defense Authorization Act, the United States authorized $680 million in funding for the Iron Dome. The United states funds programs like the Iron Dome and the Arrow III missile systems because they are systems solely used for defense and cannot be used for aggressive actions.
When Israel announced the begining of their ground offensive during Operation Protective Edge, they soon after approached the United States Department of Defense to request funding as they braced for a longer conflict than they were originally expecting. Benjamin Netanyahu told the defense officials that Israel had to secure more rockets for the Iron Dome because the Israeli military feared their supply would not last the conflict. After these meetings between defense officials a proposal was made to Congress by Defense Secretary Chuck Hagel for an additional $225 million in funding for the Iron Dome.
A few days later the Israeli Military went through military channels instead of diplomatic and asked the US Military for a variety of ammunitions and supplies including 120-mm mortar shells and 40-mm illuminating rounds. This military to military deal was unknown to the bureaucrats: because it went through military channels no signature or approval from the Department of Defense or the Defense Secretary himself was needed. The Israelis essentially pushed the US government aside. On July 30 2014 this situation became known to senior defense officials when the US Military released the 120-mm and 40-mm rounds to Israel. Defense officials and Diplomats contest that they were "blindsided" by the release of these munitions to the Israeli military. These munitions transferes were made without the consent or approval of certain higher-ups, and were as one Obama administration official put it "a routine check-of-the-box approval process". The individuals involved in the political sphere were upset and troubled when Israel bypassed them to secure additional arms through military to military means.
After this incident the White House and the State Department announced that any further munitions requests made by Israel would have to have both of their individual approvals prior to being agreed upon, rather than have the military continue to be able to approve certain arms requests. This is meant to slow down the approval process and heavily scrutinize every request, sending a strong message to Israel that the United States government did not approve of the fact that they went behind it's back to secure military funding. In addition to switching to an individual basis of approval for requests, the US military halted a shipment of Hellfire rockets bound for Israel after learning of the situation. The Israeli Military followed the guidelines when making these requests, and claim that it was never meant to be a surprise or hidden from the US officials.
As a consequence of this policy of increased scrutiny of Israeli arms purchases from the United States, the Israeli government announced on October 16 2014 that Israel will be decreasing the amount of arms purchased from the United States and manufacturing more in their own country. The Israeli government has halted production on US soil of multiple highly sensitive weapons systems and ammunitions, and has made plans to drastically increase their production of IAI missiles to replace the Hellfire missiles that they had been recieving from the United States.