Indigenous Procurement Policy overview

Indigenous AffairsEconomic DevelopmentIndigenous Procurement Policy
Monday, 26 November 2018
Publication author(s):
Department of the Prime Minister and Cabinet
Publication abstract:

Exemption 17 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.

Exemption 17 Commonwealth Procurement Rules

Exemption 17 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.

When to use Exemption 17

The Indigenous Procurement Policy (IPP) gives direction to procurement officers on when Exemption 17 to the Commonwealth Procurement Rules (CPR) 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 use in contracts valued at $7.5 million or more in specified sectors.

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.

Definition of 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.

Under the policy, an Indigenous SME is a business with fewer than 200 full-time equivalent employees.

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.        

Government IPP target

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 the mandatory set-aside works

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.

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.
  • Politics and civic affairs services.

The mandatory minimum requirements (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.

Supply chain and Indigenous workforce targets will be higher in remote contracts, relative to the local Indigenous population.

An organisation’s past performance in relation to performance against its past Indigenous participation targets must be considered in the tender evaluation process for future contracts in which the MMR will apply.

This information will be stored centrally and accessible by all Commonwealth officers to support effective implementation of this measure.

For detailed information refer to the MMR policy guide.

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