The process of indigenous procurement can be confusing for many businesses and organisations. In this article, we provide answers to many of the burning questions you may have around this topic. Reach out to us if we haven’t answered a question for you.
How do the commonwealth procurement rules support indigenous procurement?
Exemption 16 of the Commonwealth Procurement Rules (CPR) enables Commonwealth buyers to purchase directly from Indigenous small and medium enterprises (SMEs) for contracts of any size and value. Under this exemption, value for money must still be determined but this can be done through a simple quote process.
What is the indigenous procurement policy (IPP)?
The IPP gives direction to procurement officers on when Exemption 16 to the CPR’s must be considered.
The IPP has three parts:
- A target for the number of contracts to be awarded to Indigenous businesses.
- A mandatory set-aside of contracts valued between $80,000 to $200,000 and all remote contracts.
- Indigenous participation requirements for Indigenous employment and/or supplier used in contracts valued at $7.5 million or more in specified sectors.
What is an indigenous business?
Under the policy, an Indigenous business is any business that is 50 per cent or more Indigenous-owned. Supply Nation maintains a free Indigenous business register at www.supplynation.org.au.
What is a small and medium enterprise?
Under the policy, an Indigenous SME is a business with fewer than 200 full-time equivalent employees.
What are remote contracts?
Contracts in which the majority (by value) of goods and services will be delivered in a remote location. A map of remote locations is available on the Department of the Prime Minister & Cabinet (PM&C) website.
Who needs to comply with the IPP?
The policy applies to all Commonwealth non-corporate entities that are subject to the Commonwealth Procurement Rules (CPR). All other entities are encouraged to adopt the policy as best practice.
How does the government target work?
An annual target of 3 per cent applies to the Commonwealth and each Commonwealth portfolio. Commonwealth and portfolio results against targets are published on the PM&C website every 12 months.
How does the mandatory set-aside work?
To comply, procurement officers must determine whether an Indigenous SME can deliver the goods or services on a value-for-money basis before approaching the open market.
The Commonwealth buyer must at a minimum:
- Search Supply Nation’s Indigenous Business Direct to identify if an Indigenous SME is able to deliver the goods or services.
- If so, investigate whether the Indigenous SME offers value for money.
- If it does, the contract must be offered to the Indigenous SME.
- If it doesn’t, then the outcome of the search must be documented and ordinary procurement processes followed.
What contracts are subject to the indigenous participation requirements?
Mandatory minimum Indigenous participation requirements (MMRs) apply to domestic contracts valued at $7.5 million or more where the majority of the value of the contract is being spent in the following industry sectors:
- building and facility construction and maintenance services;
- transportation, storage and mail services;
- education and training services;
- industrial cleaning services;
- farming and fishing and forestry and wildlife;
- editorial and design and graphic and fine art services;
- travel and food and lodging and entertainment services; and
- politics and civic affairs services.
What are the MMR targets?
The MMR are minimum levels of Indigenous employment (workforce) and supplier use (supply chain) that must be met over the life of the contract.
MMR targets apply to either the contract awarded (contract-based) or a contractor’s Australian-based organisation (organisation based):
- The MMR contract-based target is 4 per cent.
- The MMR organisation based target is 3 per cent.