SIMI VALLEY, Calif. (Reuters) - Frank Kendall, the Pentagon's chief arms buyer, said on Saturday he was hopeful that a proposed three-year block buy of Lockheed Martin Corp F-35 fighter jets, expected to generate large savings, would go ahead."I can't say what's in the final budget, but I'm very hopeful that the block buy will proceed as planned, Kendall told Reuters at the annual Reagan National Defense Forum in southern California.

Kendall said Pentagon officials had debated postponing or scrapping the block buy, which would cover more than 400 aircraft and includes purchases by the U.S. military and other countries participating in the F-35 program, until after operational testing and evaluation had been completed.

The Pentagon's chief weapons tester, Michael Gilmore, has long argued about the need to test the planes before buying and building larger quantities.

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The Pentagon and its international buyers have pushed hard for the block buy to help drive costs lower via bigger economies of scale.

Partners counting on the "block buy" include Norway which is banking on saving about $50 million (400 million Norwegian kroner) when it buys 12 F-35 warplanes from Lockheed in the proposed group purchase.

News that the bundled purchases were likely to continue come after tense negotiations between Lockheed and the government about the latest F-35 contracts.

In November, negotiations on buying the ninth batch of F-35 warplanes broke down and the government imposed a contract on the U.S. arms maker after more than a year of negotiations had failed to culminate in a suitable agreement. Ultimately, the DOD priced the 57 jets in ninth batch of F-35s at $6.1 billion.

In a statement at the time, Lockheed said it was disappointed the contract had not been mutually agreed.

Scrapping the block buy, which covers fiscal years 2018 through 2020, would have been another blow to the F-35 program, and allies counting on the deal to lower production costs.

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Lockheed and its key partners, Northrop Grumman Corp, Pratt & Whitney and BAE Systems, are developing and building three variants of the F-35s for the U.S. military and 10 allies including: Britain, Australia, Norway, Denmark, the Netherlands, Italy, Turkey, Israel, Japan and South Korea.

(Reporting by Andrea Shalal and Mike Stone; Editing by Eric Meijer)