The Indigenous Procurement Policy (‘IPP’), which commenced on 1 July 2015, aims to increase Indigenous participation in the economy by stimulating Indigenous business development and entrepreneurship.

Under the IPP, Indigenous businesses (any business which is 50 percent or more Indigenous owned) will have the opportunity to participate in contracts awarded by the Federal Government. From a target of 0.5 percent of total contracts in the 2015-16 and increasing to 3 percent of total contracts in 2019-20.  Considering in the 2014-15 financial year 69,236 contracts to purchase goods and services at an approximate value of $59.4 billion were awarded by the Federal Government, the increase of 2.5 percent over four years represents big bucks.

Opportunities provided by the IPP could be a game changer for Indigenous businesses and communities.  In order to make the most of such opportunities will require access to significant capital, training and upskilling by Indigenous businesses.  Indigenous businesses have identified these issues and are seeking the assistance from non-Indigenous businesses through joint ventures, alliance or teaming agreements or similar contractual arrangements.

Kain Lawyers recommend that any contractual arrangements in respect of Federal Government procurement contracts between non-Indigenous and Indigenous businesses must include commitments to advance the objectives of the IPP.  These commitments must be measureable and sustainable and report the direct and indirect benefits to Indigenous Australians such as:

• indigenous employment, training and upskilling across all levels of employment;
• dividends and distributions to its Indigenous shareholders, representative bodies and communities;
• subcontracting with and procurement from other Indigenous businesses and communities; and
• other economic and social benefits derived by Indigenous communities.

If you are an Indigenous or a non-Indigenous business and want advice on contractual arrangements or how to structure your business arrangements to comply with and advance the objectives of the IPP, please contact us.

Written by Tim Hall