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.

S.3163 was introduced in the Senate on November 7, 2025 by Senator Slotkin (D-MI) with cosponsor Senator Sheehy (R-MT), referred to the Armed Services Committee. The bill directs the Secretary of Defense, by March 1, 2026, to seek engagement with Taiwan officials on a joint program for co-development and co-production of uncrewed systems and counter-uncrewed systems. This is a legislative mandate — not a request — and it explicitly requires use of Title 10 acquisition authorities, which are the same authorities used for major defense acquisition programs. The money trail is clear: the bill does not appropriate specific funding, but it directs the Secretary of Defense to use existing authorities to create the program. Funding will come from the defense budget through the NDAA and subsequent appropriations. The NDAA for FY2026 (S.2296, related bill currently pending) is the likely vehicle. The related NDAA bills (S.2296 held at desk, S.1071 already public law 119-60) show Congress is actively legislating defense policy, increasing the probability S.3163 language is folded into the next NDAA mark-up. The structural winners are companies with existing, mature drone and C-UAS product lines that can be immediately transferred or co-produced with Taiwan. Kratos ($KTOS) is the highest-conviction pure play: their BQM-177A target drone and XQ-58A Valkyrie are the most directly relevant platforms, and Kratos has explicit experience with international co-production. AeroVironment ($AVAV) is second: Switchblade loitering munitions are already in Taiwanese consideration, and the bill formalizes the government-to-government framework that has been politically difficult to navigate. Raytheon ($RTX) wins on C-UAS with Coyote/KuRFS, the most operationally deployed system set. Northrop Grumman ($NOC) wins on system integration for C-UAS command and control. The April 20, 2026 Presidential Memorandum on the Defense Production Act directly amplifies this bill. The DPA determination accelerates domestic industrial base investment, which is a prerequisite for expanding production capacity to support a US-Taiwan co-production program. Increased DPA investment means primes can build factory capacity faster to fulfill the mandate that S.3163 creates. This is a significant reinforcing signal. Real market data shows a severe 30-day sector selloff. LMT: -16.81%, RTX: -7.4%, NOC: -14.9%, GD: -9.54%, KTOS: -14.29%, AVAV: +4.29%. The selloff appears driven by broader market rotation rather than sector-specific fundamentals. AVAV's +4.29% 30-day gain is an outlier, likely reflecting existing Taiwan drone program expectations. The sector's selloff provides a structural entry point for investors seeking exposure to a mandated new procurement program with cross-party sponsorship (Slotkin-D, Sheehy-R) and high NDAA inclusion probability.