Gates's proposal would cancel a projected $26bn "transformational satellite" military communications programme also to be awarded to Lockheed Martin and Boeing.
He also called for a new missile defence system in Alaska to be cut, as well as a new presidential helicopter.
However, the proposals would increase funding for unmanned aerial vehicles and other intelligence, surveillance, communications and reconnaissance programmes designed to aid counter-insurgency measures.
"As I told the congress in January, this budget represents an opportunity, one of those rare chances to match virtue to necessity, to critically and ruthlessly separate appetites from real requirements," Gates said.
The recommendations need to be approved by the White House and then by congress, where some politicians have vowed to fight for weapons programmes.
Admiral Mike Mullen, the chairman of the US joint chiefs of staff, praised the proposals, saying it was time the budget reflected the needs of counter-insurgency campaigns.
"Some will argue he is tilting dangerously away from conventional capabilities. He is not," Mullen said in a statement.
"In truth, he is evening out what has been in this time of war a fairly lop-sided approach to defence acquisition," said Mullen.