Indigenous Procurement Policy

Since 1 July 2015, the IPP has generated $2.5 billion in economic activity for the Indigenous business sector.

A total of 16,482 contracts have been awarded to 1,765 Indigenous businesses.

The IPP is a mandatory procurement-connected policy under the legislative instrument of the Commonwealth Procurement Rules.

The purpose of the Indigenous Procurement Policy (IPP) is to leverage the Commonwealth’s annual multi-billion procurement spend to drive demand for Indigenous goods and services, stimulate Indigenous economic development and grow the Indigenous business sector.

The IPP was launched on 1 July 2015 and has three main parts:

A target number of contracts that need to be awarded to Indigenous businesses.
A mandatory set-aside for remote contracts and contracts valued between $80,000 - $200,000.
Minimum Indigenous participation requirements in contracts valued at or above $7.5m in certain industries.

Changes to the Indigenous Procurement Policy

From 1 July 2019, to ensure Indigenous businesses win higher value contracts at a level closer to those of non-Indigenous businesses, a target based on the value of contracts awarded will be introduced. The target will be set at one per cent in FY19-20 and will be increased by 0.25 per cent each year until it reaches three per cent in 2027.

From 1 July 2020, Indigenous participation targets will be mandatory in high value contracts across more specified industries. Further details will be released in the coming months on which industries will be covered by these changes.

For more information refer to Changes to the Indigenous Procurement Policy.

Commonwealth Indigenous procurement outcomes

The 2017-18 results demonstrate the policy, now in its third year, is achieving opportunities and growth for the Indigenous business sector with the total number and value of contracts awarded to Indigenous-owned businesses increasing year on year.

In 2017-18 the Commonwealth awarded 4,597 new contracts to 735 Indigenous businesses valued at $802 million.

Contracts were awarded across all industry sectors.

Contracts were awarded to Indigenous-owned businesses in all states and territories.

The Commonwealth and all portfolios exceeded their 3 per cent Indigenous Procurement Policy target in 2017-18.

The method for calculating and measuring against the target is outlined in the IPP policy document.

**Commonwealth portfolio performance against 2017-18 targets**
Portfolio	Target 2017–18	Contract count against target ^(a)	Value of contracts
Home Affairs	174	856	$10.9m
Human Services	106	708	$25.7m
Defence	420	612	$485.2m
Communications and the Arts	28	525	$46.5m
Prime Minister and Cabinet	38	395	$31.2m
Environment and Energy	84	299	$25.6m
Treasury	114	275	$30.8m
Jobs and Small Business	44	216	$9.4m
Health	73	195	$28m
Industry, Innovation and Science	90	187	$32.2m
Foreign Affairs and Trade	78	179	$12.2m
Attorney-General's	52	179	$7.5m
Education and Training	21	174	$9.2m
Agriculture and Water Resources	31	112	$7.5m
Social Services	38	84	$6.8m
Infrastructure, Regional Development and Cities	48	78	$23.6m
Finance	48	64	$4.6m
Veterans' Affairs	25	53	$3.3m
Parliamentary Departments	25	44	$1.7m
Total Commonwealth	1,537	5,235	$802.2m

^{(a) - For details of how portfolios may report contracts against targets refer to the Indigenous Procurement Policy.}

Commonwealth Indigenous Procurement Targets (number of contracts by portfolio)

Due to the success of the policy’s first year, IPP portfolio targets of three per cent of new domestic Commonwealth contracts for 2020 were brought forward to 2016–17.

**Commonwealth Indigenous Procurement Targets 2018-19 - By number of contracts and portfolio**
Portfolio	2018-19 procurement targets (3%)
Agriculture and Water Resources	37
Attorney-General's	42
Communications and the Arts	18
Defence	618
Education and Training	32
Environment and Energy	68
Finance	51
Foreign Affairs and Trade	65
Health	74
Home Affairs	123
Human Services	71
Industry, Innovation and Science	76
Infrastructure and Regional Development and Cities	45
Jobs and Small Business	59
Parliamentary Departments	19
Prime Minister and Cabinet	46
Social Services	36
Treasury	132
Veterans' Affairs	30
Total Commonwealth	1,642

Mandatory set aside results

The mandatory set-aside (MSA) requires Indigenous businesses to be approached first to quote on contracts delivered in remote areas and for all contracts valued between $80,000 - $200,000.

Performance against the mandatory set aside is improving, but a continued focus on implementation is needed.

	2015-16	2016-17	2017-18
Number of new IPP contracts valued at $80,000–$200,000 and listed on AusTender	132	226	305
Number of new IPP contracts, valued between $80,000–$200,000, as percentage of total listed on AusTender	1.4%	2.5%	3.2%
Value of new IPP contracts valued at $80,000–$200,000 and listed on AusTender ($ million)	$16.9	$29.0	$39.2
Value of new IPP contracts valued between $80,000–$200,000, as percentage of total value of these contracts listed on AusTender	1.4%	2.5%	3.2%

MSA notes:

Under the IPP, the MSA applies to all contracts delivered in remote areas regardless of value. Contracts delivered in remote areas that also meet the MSA threshold are counted twice.
These figures represents the minimum possible result.
A map defining remote areas is available.

Remote performance

Our data for remote Australia is incomplete. PM&C continues to work with portfolios to develop better systems to collect this data, which currently needs to be manually identify and reported.

	2015-16	2016-17	2017-18
Number of new contracts delivered in remote areas	207	600	829*
Value of new contracts delivered in remote areas ($ million)	$26.7	$64.0	$34.2*

_{*Collecting remote contracts data is a manual process and is still underway for 2017-18. These figures represent what has been collected up to 21 September 2018 and will be updated once the collection is complete.}

Mandatory minimum requirements

Minimum Indigenous participation requirements for Indigenous workforce and/or supply targets currently apply to contracts valued at or above $7.5m that are awarded in 8 industries. From 1 July 2020, the MMR will apply to contracts awarded in an additional 11 industries.

MMR currently apply to the following eight industry categories:

Farming and fishing and forestry and wildlife contracting services.
Building, construction and maintenance services.
Industrial cleaning services.
Transportation, storage and mail services.
Editorial and design and graphic and fine art services.
Education and training services.
Travel and food and lodging and entertainment services.
Politics and civic affairs services.

From 1 July 2020, MMR will be expanded to cover 19 industry categories. The additional 11 industries are:

Financial instruments, products, contracts and agreements.
Mining and oil and gas services.
Industrial production and manufacturing services.
Environmental services.
Management and business professionals and administrative services (sub-category exemptions apply*).
Engineering and research and technology-based services.
Financial and insurance services (sub-category exemptions apply*).
Healthcare services.
Personal and domestic services.
National defence and public order and security and safety services (sub-category exemption applies).
Organisations and clubs.

_{*sub-category exemption applies – for more information refer to Changes to the IPP page and UNSPSC policy guide.}

Since 1 July 2016*, 131 contracts with minimum mandatory requirements (MMR) were awarded to 63 organisations valued at $6.4 billion.

Meet the supplier events

More information is available on the SupplyNation website.

Contact us

Queries on the Indigenous Procurement Policy can be sent to IndigenousProcurement@pmc.gov.au.

Further information on Indigenous Businesses

For further information on Indigenous businesses please visit the Supply Nation Indigenous Business Direct website at Supply Nation Indigenous Business Direct.