The Indigenous Procurement Policy (IPP) was initiated on 1 July 2015. Since its inception, the policy has boosted Indigenous entrepreneurship and supported business development.
The IPP, along with the WA state government Aboriginal Procurement Policy (APP), implemented in 2018, have worked hand in hand to achieve this by creating more opportunities for Indigenous Australians to participate in the economy.
Prior to these policies, Indigenous businesses had less opportunity in securing Commonwealth procurement. Since 2015, the IPP alone has generated $5.3 billion in contracting opportunities for Indigenous businesses. This includes over 37,763 contracts awarded to more than 2,140 Indigenous businesses.
More details on the Indigenous Procurement Policy (IPP)
How the IPP aims to increase opportunities for Indigenous businesses:
- The Commonwealth needs to award a certain number of domestic contracts to Indigenous enterprises every financial year. This number is determined by the estimated number of contracts expected for the year.
- The Mandatory Minimum Indigenous Participation Requirements (MMR) includes targets for Indigenous employment and business participation in Australian contracts valued at $7.5 million or more across 19 industries.
- The Mandatory Set Aside (MSA) is in place to enable Indigenous businesses to demonstrate value for money before a general approach to market.
There are annual targets for the volume and value of the contracts awarded to Indigenous businesses. The success of the IPP is based on whether targets for the number of contracts awarded and the total volume and value of contracts are achieved.
How procurement targets are set
The target for the upcoming financial year will be calculated based on the average number of domestic contracts entered into over the previous three financial years that data is available for.
This method has been adopted because the total number of domestic contracts for a financial year will not be known in advance, and to manage fluctuations in the number of contracts from year to year.
For example, the target for 2015-16 is set using the average of the number of domestic contracts entered into in 2011-12, 2012-13 and 2013-14.
IPP contract count by financial year
The following graph supplied by the National Indigenous Australians Agency details the contract count for the Indigenous business sector since the IPP started in 2015. As you can see, the IPP has had a huge impact on the success of Indigenous business success, and it is growing year on year.
Find out more about the Indigenous Procurement Policy from the following supporting documents:
- Indigenous Procurement Policy
- Factsheet: Mandatory Minimum Indigenous Participation Requirements
- Factsheet: Mandatory Set Aside
More details on the Aboriginal Procurement Policy (APP)
The APP was implemented in 2018 and mandates targets for the award of contracts to Indigenous businesses by WA Government agencies. It works similar to the IPP, except it is based on state targets.
Success of the APP
Since its introduction, the APP has awarded 697 contracts, valued at more than $476 million, to 209 Indigenous businesses. Not to mention, the progressive yearly targets continue to be exceeded; in the 2018-19 FY the target was 1 percent and 4.7 percent was achieved, 2019-20 FY the target was 2 percent and 5.5 percent was achieved, and in 2020-21 FY 3 percent was the target and 6.5 percent was achieved.
On top of this, more than 76 percent of contracts awarded to Aboriginal businesses in 2020-21 were valued at more than $100,000. With the highest performing agencies including the Departments of Communities and Education, Main Roads and the Public Transport Authority.
Updates to the APP
From 1 January 2022, the APP was updated to include Indigenous participation requirements for goods, services and works contracts valued at $5 million and above. These requirements apply to 5 categories:
- Community services
- Construction
- Education and training
- Public administration and finance
- Services delivered predominantly by Indigenous people (i.e. services delivered to remote Aboriginal communities.
See the suite of Aboriginal Procurement Policy guides for more information:
- APP Agency Practice Guide
- APP Guide for Aboriginal businesses
- APP Supplier Guide (Aboriginal Participation)
Final thoughts
The APP and IPP continue to support and create a number of opportunities for Indigenous businesses in Australia. It is extremely positive to see year on year growth across both procurement policies and continual expansion into other key areas, such as employment and subcontracting targets.
Opportunities are available to change your circumstances, and now is the time to grasp them.”
Jarrod Hayden, Director – Goomarin Services
FAQs about the APP and IPP
An Indigenous business is any business that is 50 percent or more Indigenous owned.
The Indigenous Procurement Policy was introduced in July 2015 to support and create more opportunities for Indigenous businesses in Australia.
The WA state government Aboriginal Procurement Policy (APP) was initiated in 2018.
