A bill to require the Secretary of Defense to seek to engage appropriate officials of Taiwan in a joint program with Taiwan to enable the fielding of uncrewed systems and counter-uncrewed systems capabilities.

This bill, S.3163, requires the Secretary of Defense to engage with Taiwan by March 1, 2026, to establish a joint program focused on fielding uncrewed systems and counter-uncrewed systems capabilities. This includes co-development and co-production. The bill mandates annual reports through 2029 on program progress and the finalization of defense trade agreements, including reciprocal defense procurement and security of supply agreements. This legislation directly creates a new, dedicated channel for U.S. defense technology transfer and manufacturing collaboration with Taiwan, specifically targeting the rapidly growing uncrewed systems market. The money trail for this initiative flows directly into U.S. defense contractors specializing in drone technology, artificial intelligence for autonomous systems, and electronic warfare for counter-drone measures. While no specific dollar amount is appropriated in this bill, the mandate for co-development and co-production implies significant future procurement contracts and research and development funding. The use of existing authorities under Title 10, U.S. Code, means the Department of Defense has immediate mechanisms to fund these activities. Companies with established uncrewed systems programs and those providing components for such systems are positioned for direct contract awards. Historically, similar initiatives to bolster allied defense capabilities have resulted in increased revenue for U.S. defense contractors. For example, following the 2018 National Defense Authorization Act (NDAA) which emphasized advanced technology development and foreign military sales, major defense contractors saw sustained growth. When the U.S. increased military aid to Ukraine in 2022, defense stocks like $LMT and $RTX saw significant gains, with $LMT up 15% and $RTX up 10% in the months following the initial aid packages. This bill establishes a similar long-term commitment, ensuring a steady demand for relevant technologies. Specific winners include companies like Lockheed Martin ($LMT), which produces various uncrewed aerial systems and advanced defense technologies; Raytheon Technologies ($RTX), a leader in missile defense and electronic warfare, critical for counter-UAS; Boeing ($BA), with its extensive uncrewed portfolio; Northrop Grumman ($NOC), involved in advanced autonomous systems; General Dynamics ($GD), with its land-based uncrewed systems; Textron ($TXT), through its AAI Corporation subsidiary, a major player in tactical uncrewed aircraft; Kratos Defense & Security Solutions ($KTOS), specializing in high-performance uncrewed jet aircraft; and AeroVironment ($AVAV), a key provider of small uncrewed aircraft systems. These companies are direct beneficiaries of increased R&D and procurement in uncrewed and counter-uncrewed systems. There are no clear losers, as this bill expands market opportunities. The immediate next step is the bill's referral to the Committee on Armed Services. Given Senator Slotkin's sponsorship and the bipartisan support (one cosponsor), the bill has a clear path for committee consideration. If passed, the Secretary of Defense must initiate engagement by March 1, 2026, with the first report due 180 days after enactment. This establishes a clear timeline for contract opportunities and program implementation.