From 1 July 2019, the Federal Government Indigenous Procurement Policy (IPP) amendments will kick in. The IPP which was adopted on 1 July 2015, sets a target for the number of Commonwealth contracts that are to be awarded to Indigenous businesses. An Indigenous business is defined as a business that is 50% Indigenous owned and is a small to medium enterprise (SME) i.e. fewer than 200 FTE employees. The contracts can include supply chain and/or workforce participation with minimum levels of Indigenous employment and supplier use, particularly in remote locations. The supply chain can include subcontracts with other Indigenous businesses.
So far, the contracts that have been awarded to Indigenous businesses under the IPP have been in 8 specified industries including building and construction, transportation and education.
Under the new IPP, the Federal Government has increased the number of industries where the contracts are available to include another 11 industries including healthcare, financial, business, professional and administrative services. The aim is to ensure that there is a targeted increase in the number of Federal government contracts with Indigenous businesses and that these contracts are generally higher value contracts.
The target will increase incrementally from 1 July 2019 with an expectation that 3% of Federal Government contracts will be awarded to Indigenous businesses by 2027.
Why is this relevant to Local Government?
A local government may enter into a joint venture with an Indigenous business (subject to the usual beneficial enterprise provisions of the Local Government Act 2009 and Statutory Bodies Financial Arrangements Act) to bid for Federal Government contracts in the expanded industries. There are specific requirements for joint venture arrangements which must satisfy the criteria in the IPP including the level of Indigenous involvement and control of the joint venture entity.
Preston Law has a highly experienced government team which has provided advice on corporate structures, beneficial enterprises and joint venture arrangements for local governments throughout the State and particularly in rural and remote locations. Please contact us if you would like more information.