How to address the Indigenous Procurement Policy in government tenders

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Have you ever encountered the section on Indigenous Procurement Policy when responding to a government RFT, and wondered how to address it in your response?

Australia’s Commonwealth Indigenous Procurement Policy was launched in July 2015 to create opportunities for Indigenous businesses to grow and attract private investment. Broadly speaking, it yielded changes to government procurement policies to underpin procurement targets for goods and services from Indigenous businesses.

indigenous procurement policy

If a Commonwealth Government Department is planning a procurement, then under certain conditions if an Indigenous enterprise exists that provides the services and products being sought, the Indigenous enterprise must be given preference to supply.

If the Department’s procurement team cannot assign the work to an Indigenous enterprise, then it is free to proceed to open tender or one of the other procurement methods appropriate to the requirement. However, an open procurement must also seek to ascribe value in the assessment to submissions that support the aims of the Indigenous Procurement Policy and support for Indigenous enterprises.

By being aware of this policy, and embracing its intent, businesses have the opportunity to build relationships with Indigenous suppliers and contractors — to both differentiate themselves from competitors and support important social and economic development.

RFTs and the Indigenous Procurement Policy

In support of the Indigenous Procurement Policy, government Requests for Tender often include a paragraph headed Indigenous Procurement Policy and a series of questions.

Even when government procurements abide by the commitments established by the Indigenous Procurement Policy, the degree to which different Departments ask for compliance or demonstrate how you as a supplier might help them meet their commitments, varies greatly.

Here is an example from the Department of Finance for a recent federal government RFT:

1. Tenderers should provide an overview of the Indigenous programs or strategies it has in place, or is developing. This may take the form of:

1.1. a copy of any existing reconciliation action or diversity plan, and an overview of this/these plan(s);

1.2. details of any businesses operated by organisations that are 50% or more Indigenous owned that the Tenderer currently purchases products and/or services from;

1.3. current numbers of Indigenous Australians employed by the Tenderer; and/or

1.4. whether the Tenderer is more than 50% Indigenous owner; and/or

1.5. details of other Indigenous programs or strategies the Tenderer will initiate over the term of any resultant Head Agreement.

Whereas here is the wording recently used by the Department of Defence for the Information Communications Technology Panel Arrangement:

Briefly detail your organisation’s proposed approach to using Indigenous enterprises and employment of Indigenous Australians in the delivery of the Services.

Moreover, when you review the evaluation criteria and the weighting placed on these policy questions, amongst all the questions associated with meeting the specifications of the service, they also vary greatly in emphasis and contribution to the overall score.

Ignore policy at your peril

Government policy — whether it be at the local, state or federal level — matters. Especially when it comes to policy that is included within a procurement framework or process.

When it is all said and done and the Director General, Departmental Secretary or similar is about to approve the awarding of a contract to a particular supplier, the one question that the Chief Procurement Officer (CPO) will focus on is ‘how will this contract deliver on the policy targets and commitments for this year?’. You increase your chances of success if you treat policy questions with respect and provide the answer.

Policy has two impacts on procurement.

First, policies that directly relate to government procurements — such as policies on Indigenous development, local industry, and social and community issues — will produce questions and assessments of suppliers’ contributions to meeting the commitments these policies create.

Second, regardless of the evaluation criteria expressed in the RFT and used by the evaluation team, the Minister may pull a policy trump card and award the contract to the supplier who contributes most to the government’s policy and election promises.

It ain’t easy

When I was recently advising an IT company on how to respond to the first-mentioned example’s questions on Indigenous Procurement Policy, I was struck by how hard it can be to write something that shows a supplier will make a genuine contribution to the policy. Especially when they had not previously considered the requirement and do not directly meet it.

For a start, the IT company in question is not more than 50% Indigenous-owned (as defined by the policy — see below). A related policy condition to the ownership question is ‘does the company use subcontractors that are Indigenous enterprises?’. After much searching, I found only one Indigenous enterprise registered with Supply Nation (a not for profit organisation supporting the Indigenous community) that provided IT services of one sort or another (and not directly relevant to this tender).

It appeared there was little scope to come up with a meaningful contribution to the policy. The IT company is a strong multicultural employer and has a strong ethnic culture with an inclusive and collaborative work ethic. Not much to play with and I had to start somewhere.

Here is what I provided to my client in response to RFT questions that addressed the Indigenous Procurement Policy questions (first example above).

XX is not a registered Indigenous Enterprise as we do not have more than 50% Indigenous ownership. We do not at this time have Indigenous employees working at XX or Indigenous enterprises subcontracting to XX.

XX has a strong culture around diversity and multiculturalism. We currently employ XX practitioners for a range of nationalities and ethnic backgrounds. We also have a strong culture and practice around equal opportunity and non-discrimination. The next step in our cultural evolution at XX is to extend this track record to recognise the contribution to business from the Indigenous community of Victoria and Australia.

XX is currently devising plans to include the Commonwealth’s Indigenous Procurement Policy within its supply chain and subcontracting policies and practices. These plans have so far identified the following engagement policies

1. Supply Chain — Preference is given in the context of strong value-for-money to suppliers that are 50% or more Indigenous owned

2. Subcontractors — Preference is given in the context of strong value-for-money to subcontractors who are 50% or more Indigenous owned. Subcontractors must be Indigenous Enterprises and registered with Supply Nation (supplynation.org.au)

In addition our plans are addressing the supply of the required XX skills and knowledge from graduating Indigenous software engineers. XX is addressing this issue and the potential for employment at XX, with Victorian and Nationally based tertiary institutions.

With respect to other Indigenous programs or strategies XX will initiate over the term of the resultant Head Agreement, we are planning to include Indigenous perspectives within the design and execution of our services. XX supports an increase of opportunities for the employment of Indigenous Australians, along with the continued growth of supplier diversity in Australia.

We also recognise the value of using the expertise of Indigenous Australians to support our delivery under this panel, particularly in categories such as Service Design, Interactive Design, Inclusive Design and Accessibility where digital strategies must speak to all Australians.

In including Indigenous Australians in our processes we will:

> Involve indigenous Australians in analysing existing user experiences, use their expertise through research activities and involve them in user testing sessions

> Ensure that indigenous cultural needs are considered when assessing and testing inclusive designs

> Invite Indigenous enterprises to quote on any relevant work that is not within our scope or that complements our service offering, sourcing these organisations through the Industry Council for Aboriginal Business or Indigenous Business Australia.

The above example may not tick all the boxes but it is a start. I assert that something can always be written to support the policy questions posed in an RFT. Of course, it is better if you are able to plan ahead and actually support the policy by developing relationships with Indigenous businesses.

Each response is a single brick in the policy wall. Each brick builds a stronger picture that this supplier knows how to work with and for government objectives. With each answer, the evaluation team will begin to take notice and you may find yourself accommodated on the shortlist for your stance on policy, even if there is less than competitive pricing in your proposal.

Policies, election promises, votes… they all add up.

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*More about the Commonwealth Indigenous Procurement Policy

On 1 July 2015, Senator the Hon Nigel Scullion, Minister for Indigenous Affairs, and Senator the Hon Mathias Cormann, Minister for Finance, launched the Commonwealth Indigenous Procurement Policy. At the time it was stated that this policy is “about creating opportunities for … Indigenous businesses to grow and employ more people. It is also about stimulating private investment in new Indigenous businesses.”

It was felt that a strong Indigenous business sector will help drive financial independence, and create wealth and opportunities for Indigenous Australians. It would also provide the basis for Indigenous economic development in regional and remote Australia.

The policy would achieve this by adjusting government procurement processes each year to harness the purchasing power of the federal government to achieve real change for Indigenous Australians. The ministers claimed that “each year the Commonwealth Government purchases billions of dollars of goods and services. For the first time, the Commonwealth Government has committed to a procurement target for goods and services from Indigenous businesses. The target — three per cent of Commonwealth contracts awarded to Indigenous businesses by 2020 — is ambitious and will be achieved.”

The Indigenous Procurement policy fact sheet says:

An Indigenous business is any business that is 50% or more Indigenous owned. From 1 July 2015, Supply Nation, a not for profit organisation supporting the Indigenous community, will maintain a free register of Indigenous businesses.

The interim targets are:

  • 0.5% in 2015-16
  • 1.5% in 2016‑17
  • 2.0% in 2017-18
  • 2.5% in 2018-19

In terms of actual contracts awarded to Indigenous enterprises, it is estimated that in 2015-16 at least 250 new domestic contracts were awarded to Indigenous businesses across the Commonwealth. This will increase to more than 1,500 contracts in 2019-20 when the full 3% target applies.

3 comments in this article

  1. Kieran Shirey

    Great Article. Our company is the first Indigenous Asset Management software company in the world. We’re trying to make the most of the IPP but are still learning how it works. Our company is a shining example of the spirit in which this policy was created. Real Indigenous innovation. http://www.logitaust.com

  2. Olga Havnen

    IPP should also be extended to Aboriginal not-for profit sector (who are also businesses!) particularly in delivery of services currently provided by mainstream (non-Aboriginal) NGOs. Too often these contractual arrangements are negotiated directly between the Australian Government and mainstream NGOs. PM&C and DSS need to change their procurement processes for service delivery. Many of these services – youth programs, family support, social-emotional wellbeing. Family Centres, Safe Houses etc could readily be delivered by Aboriginal organisations in both urban and remote areas.

    FIFO services don’t work, are highly costly and inefficient and usually don’t have meaningful partnerships with local community organisations. ie. sub-contracted or integrated partnerships…. not ‘information sharing, collaboration or coordination’ which are meaningless in terms of local capacity development and decision-making.

    Aboriginal organisations are disadvantaged by not being able to compete for tenders/contracts on an open and transparent basis. Its time that preferential procurement arrangements for non-Aboriginal NGOs is ended !

  3. Bridgette

    Thank you very much Alan. I found this a very clear explanation and recommendation that will help us immensely in responding to future tenders. It has also given us some wonderful ideas on how we can better involve Indigenous Participation in what we do.

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