Authors: Joe O’Connor, Shikhar Chaturvedi, Danielle Kremer, & Wyeth Lindberg
This week: the Pentagon’s auditor releases a report on arms deliveries to Taiwan; the Legislative Yuan finally passes authorization for a special defense budget; Taiwan’s NCSIST receives U.S. certification to work in the defense sector; and Shield AI partners with Taiwanese companies to enhance unmanned undersea vehicle development; alongside weekly bids and solicitations.
Pentagon IG Releases Audit of PDA Deliveries to Taiwan
On Thursday, the U.S. Department of Defense’s Office of Inspector General released a follow-up audit on the adequacy of Presidential Drawdown Authority (PDA) equipment delivery to Taiwan. This came after a 2024 audit which revealed serious deficiencies with packing and storage of items, including moldy body armor and loose arms and ammunition.
This audit, focusing on a shipment of M16 rifles and associated equipment in September 2025, indicated that marked improvements have been made in PDA deliveries, on handling of the rifles or “serialized items,” which were packed into waterproof bags and tagged properly. However, issues continued to persist with associated equipment, including ripped boxes and crates held together with duct tape. Air Force officials were recommended to fix regulations and develop policy for shipping from alternate aerial ports of embarkation (APOEs), both of which contributed to the issues. This is also significant as it is the first publicly disclosed PDA shipment to Taiwan during the Trump administration, indicating that deliveries of common items, such as infantry equipment, are continuing.
Special Budget Authorization Passes Legislature
On Friday, the Legislative Yuan, along party lines, voted to pass an authorization bill for special defense spending, titled the “Special Act for Safeguarding National Security and Strengthening Asymmetric Capabilities Procurement.” This proposal authorizes NT$780 billion, or US$24.89 billion, in spending solely for U.S. arms sales procurement. Split into two batches, the first batch, consisting of NT$300 billion (US$9.57 billion), will fund arms sales notified in December, including Paladins, HIMARS, and TOW-2B missiles. The remainder, approximately NT$480 billion (US$15.3 billion) will fund additional U.S. sales that are not yet notified.
Budget observers will note that this proposal is approximately 60% of the Lai administration’s proposal for NT$1.25 trillion, or US$40 billion, in spending; proposed spending for domestic drone procurement and resilience was cut. Democratic Progressive Party (DPP) and Lai administration officials both expressed concern about the lower budget, with MND officials warning that some acquisition programs, including Strong Bow ABM systems and Team Awareness Kits, may be delayed due to lack of funding.
The majority in the LY, composed of the Kuomintang led by Cheng Li-wun, and the Taiwan People’s Party, led by Huang Kuo-chang, both praised the passage of the bill as “acting with great responsibility,” and combatting “corruption and waste.”
NCSIST Receives U.S. Defense Certification
Per Liberty Times, Taiwan’s National Chung-Shan Institute of Science and Technology (NCSIST) has recently received certification to work within the U.S. defense supply chain, undergoing third-party cybersecurity evaluations for Patriot radar antennas and certain drone technology. These assessments are required under provisions of the National Defense Authorization Act and the U.S. Code of Federal Regulations and allow NCSIST to be listed on the DoD’s industrial supply chain website.
Shield AI Deepens Taiwan Autonomy Partnerships
Shield AI and Taiwanese defense manufacturer Thunder Tiger Corp. announced a new memorandum of understanding to integrate Shield AI’s Hivemind autonomy software across Thunder Tiger’s unmanned systems portfolio, beginning with a Thunder Tiger unmanned surface vessel (USV) and a planned live demonstration this summer. The partnership marks Shield AI’s clearest move into Taiwan’s maritime autonomy space and builds on a broader pattern of Taiwan-focused corporate partnerships over the past year.
As TSM noted in its April 29 Weekly Arms Update, Taiwan’s Navy is already reportedly designing its next-generation combatant with a dual-hangar configuration for both an MH-60R helicopter and a vertical take-off and landing Unmanned Aerial Vehicle (UAV). Liberty Times reported that the Navy identified Shield AI’s V-BAT, or a UAV with comparable capability, as the design reference. That maritime relevance now sits alongside Shield AI’s earlier contract with NCSIST to integrate Hivemind into Taiwan-developed unmanned systems. These recent developments (coupled with the Shield AI’s Taipei 101 office opening during TADTE and teaming agreement with AIDC) now signal strengthened sustainment and integration for Shield AI’s systems in Taiwan.
Weekly Awards / Solicitations
On Wednesday, the Ministry of National Defense Headquarters awarded China Telecom Co., an NT$795.00 million (US$25.12 million) contract for cloud-based private network bandwidth services. The contract is to be fulfilled in an unknown location in Taiwan.
There were no significant solicitations of note this week.