Is the IPP on target?
Updated: Dec 18, 2019
The Indigenous Procurement Policy (IPP) was launched in July 2015 to stimulate Indigenous businesses growth through the leverage of the $60+billion in Commonwealth Government procurement contracts. The logic is; help grow the Indigenous business sector = more employment of Indigenous people = social improvement in the daily lives of Indigenous people. The brilliance of the policy is its simplicity.
We receive regular requests for more information on the IPP. To respond to these requests, the full team are researching a variety of issues surrounding the IPP. Plus we have interviewed many of our clients, business colleagues and government officials. We have compared the IPP to overseas experiences, taken a closer look at sub-contractor arrangements, specific industry challenges, joint ventures and Solicitor Director Terri Janke will shortly publish a paper discussing what constitutes an “Indigenous Enterprise” and the ethical and legal implications that arise from the definition.
The policy requires Commonwealth Departments to award a target number of contracts to Indigenous businesses, while still maintaining a value for money approach. The goal is for 3% of Commonwealth contracts to be awarded to Indigenous business by 2020. This will be introduced in yearly increments. The first year, 2015/16 had a 0.5% target – that’s 256 contracts. This financial year (2016/17) the new target is 1.5%, or 769 contracts.
How did the policy roll out?
Exceptionally well. In the first 11 months of the 2015/16 financial year, the Commonwealth Government exceeded the target of 256 contracts and awarded 993 contracts to Indigenous business. Just under $200million was spread between 282 Indigenous businesses. Compare this to the 2012/13 financial year, when only $6 million was awarded to Indigenous businesses. We’ve already seen the spending increase over 31 times, and the 3% target has not yet been introduced!
Initial reports are – every Department met their target, while many of them exceeded their targets. The ratio of contracts (993) to contractors (282), leads us to conclude many Indigenous businesses are experiencing repeat work, a sure sign that Commonwealth expectations of value for money are being achieved.
We conclude the IPP is building capability and increasing capacity of the Indigenous business sector. Best of all – it’s bringing people together.