In May 2015 the government introduced the Indigenous Procurement Policy (IPP), which includes a requirement for Australian Government entities to apply mandatory minimum requirements (MMRs) for Aboriginal and Torres Strait Islander participation to high value contracts in certain industry categories.
The MMRs apply to non-corporate Commonwealth entity procurements valued over $7.5 m in eight services industry sectors (expanding to 19 from July 2020). Entities must ensure contractors commit to participation targets of at least 4% for the project or 3% for the organisation.
The ANAO has conducted an audit to provide assurance that the MMRs are being effectively administered and entities are complying with them. It examined a sample of 69 active MMR contracts from six selected entities to test compliance with the MMRs. 35 contracts had a component delivered in a remote area.
What did they find?
* The effectiveness of the MMRs has been undermined by ineffective implementation and insufficient compliance.
* While the design of the MMRs supports the Government’s policy settings, the MMRs have been ineffectively implemented and monitored by the policy owner.
* Selected entities’ compliance with the MMRs fell short of standards. Most contracts assessed failed to comply with required steps.
What do they recommend?
* The Auditor-General made three recommendations to the National Indigenous Australians Agency aimed at improving the implementation and monitoring of the MMRs.
* The Auditor-General also made three recommendations to all audited entities aimed at increasing compliance levels.
* Audited entities agreed to the recommendations.
What can we learn?
Even if your organisation is not bound by the MMRs, you may still need to comply with procurement requirements depending on your industry or sector. For example, many state government agencies are (thankfully) trying to increase procurements from small businesses. The NSW Government is also taking steps to support bushfire affected businesses. Councils, and others, adopt a “buy local” approach to procurement.
Irrespective of what requirements your organisation has for its procurements, the ANAO report is worth a read to see how your organisation’s procurement approaches fare. You can find the report here.