Mandatory minimum requirements policy guide

 

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

The mandatory minimum requirements are minimum levels of Indigenous employment and supplier use that must be met over the life of the contract.

The mandatory minimum requirements are minimum levels of Indigenous employment and supplier use 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%.
  • The MMR organisation-based target is 3%.

Contract-based and organisation-based MMR targets can be met through Indigenous supplier use (supply chain), Indigenous employment (workforce) or a combination of both (supply chain and workforce).

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

MMR targets can be higher than the minimum 3 or 4%. For example, where part of the contract will be delivered in a remote area, the purchasing Commonwealth agency and the contractor should consider the size of the local Indigenous population relative to the non-Indigenous population. 

Difference between a ‘contract-based’ and an ‘organisation-based’ MMR

A contract-based MMR target relates to the project being delivered under the contract, ensuring Commonwealth spending directly contributes to increased Indigenous economic participation.

However, contractors may request to apply a single 3% ‘organisation-based’ MMR target across their Australian operations in lieu of one or more contract-based targets.

The organisation target may benefit companies with multiple MMR contracts where it is easier to apply a single minimum Indigenous participation requirement across their Australian operations as a whole, rather than having to consider whether their distribution of Indigenous personnel is consistent with various Commonwealth contractual arrangements. This approach also avoids Indigenous employees being arbitrarily moved to ensure contractual requirements are met.

The scope of the contractor’s ‘organisation-based reporting’ must be outlined in the contractor’s Indigenous Participation Plan and agreed with the awarding Commonwealth Agency, consistent with a good faith application of the Indigenous Procurement Policy.

Combining MMR targets

Yes, MMR targets can be met through a combination of Indigenous workforce and supply chain outcomes, as long as the sum of the combined targets equals or is greater than the relevant MMR target.

The combination approach to meeting supply chain and Indigenous workforce outcomes must be kept within a single MMR assessment method i.e. contract-based or organisation-based. For example, a 1.5% contract-based workforce target and 2.5% contract-based supply chain target would satisfy a contract-based MMR target.

Measuring ‘workforce’

For a contract-based MMR target, ‘workforce’ means:

The workforce deployed on the contracted project. This includes any subcontractor workforce deployed on the project.

For an organisation-based MMR target, ‘workforce’ means:

The Australian-based workforce of the contractor organisation.

The unit of measurement for workforce is the number of ‘full time equivalent’ (FTE) workers according to the definition of FTE relevant to the industry in which the contractor operates. This applies to both contract-based and organisation based MMR targets. Contractors must outline how they define and measure FTE in their Indigenous participation plans.

Contractor reports do not identify individual Indigenous and non-Indigenous employees and only report the number of FTE positions. Contractors must keep internal records in accordance with record management requirements outlined in their contract.

Measuring ‘supply chain’

For a contract-based MMR target, ‘supply chain’ means:

The value of goods and services delivered under the MMR contract that is sub-contracted to Indigenous-owned businesses.

For an organisation-based MMR target, ‘supply chain’ means:

The value of the contractor organisation's  Australian supply chain that is subcontracted/purchased from Indigenous-owned businesses.

Contractors must outline how they define and measure the organisation’s supply chain in the contract’s Indigenous participation plan. The unit of measurement for supply chain is Australian dollars.

Reporting progress towards meeting MMR targets

Over the term of the contract, the contractor is required to report quarterly to their contracting agency on their supply chain and/or workforce outcomes. Contracting Commonwealth agencies will advise contractors how and when they must complete quarterly progress reports (QPRs). To support efficient and accurate reporting, the Commonwealth has an online reporting solution - the ‘IPP Contractor Portal’.

Information reported by the contractor will be held in a central database.  This information, including MMR ratings from completed contracts, will be used by Commonwealth agencies in the assessment process of future tenders subject to MMR requirements.

Contractor data can only be viewed by Commonwealth officers for the purpose of contract management and procurement processes. Contractors may see their own information and reporting history but not that of any other contracting organisation.

Calculation of final compliance with MMR targets

MMR compliance is calculated after the contract is complete and the last quarterly report has been submitted and assessed. MMR compliance is based on an average of the workforce and supply chain information the contractor reports over the life of the contract. 

For contract-based workforce, organisation-based workforce, and organisation-based supply chain targets, final performance against the MMR target is calculated based on a weighted average over the term of the contract.

For contract-based supply chain targets, final performance against the MMR target is calculated based on the cumulative value of subcontracts to Indigenous businesses over the life of the contract.

MMR targets compliance rating

The contractor’s compliance rating for each completed contract is retained on a central database. It can only be viewed by Commonwealth officers for the purpose of contract management, aggregate IPP reporting and future procurement processes.  

As part of a response to an approach to market (tender) where the MMR apply to the procurement, all tenderers must declare whether they have been (or are currently) party to a Commonwealth contract that includes a MMR, and state their level of compliance with the MMR. They may also provide evidence of their commitment to Indigenous economic participation in the delivery of contracts where the MMR didn’t apply.

The Commonwealth entity must consider the tenderer’s past performance in relation to the MMR as part of the tender assessment.

Questions about MMR contracts

If you are responding to an approach to market (tender), you should refer all questions to the nominated contact/s listed on the tender documentation.

If you have an existing contract with the Commonwealth, you should contact the contracting agency’s contract manager.

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