The money raised would be spent on radars, armored vehicles and unmanned aircraft which would mainly patrol remote border areas deep in the Amazon jungle.

Brazil's Embraer (EMBR3.SA)(ERJ.N), the world's No. 3 aircraft maker, and foreign defense companies have received information about the project and have until the end of January to make their proposals, the newspaper said.

Those foreign companies are: Germany's Rheinmetall (RHMG.DE) and Rohde & Schwarz, Harris Corp (HRS.N) and Rockwell Collins (COL.N) from the United States, France's Thales (TCFP.PA), Israel's Elbit Tadiran, Italy's Selex, and Cassidian (the defense and security subsidiary of the European aerospace group EADS (EAD.PA)).

Spanish IT firm Indra (IDR.MC) and Sweden's Saab AB (SAABb.ST) also later received details of the project, the newspaper reported.

The government sees the entry of weapons and smuggled goods across Brazil's frontiers with countries such as Colombia, Venezuela and Peru, as the biggest threat to national security, Folha said.

Tougher border controls would also stop so many guns ending up in places like Rio de Janeiro -- a city the government is already desperately trying to clean up before it hosts the Olympic Games in 2016.

**Reporting by Samantha Pearson in Sao Paulo; Editing by Cynthia Osterman