Over the past three decades the Australian Government has sought to use its position as a major procurer of goods and services in the Australian economy to generate economic opportunities for Aboriginal and Torres Strait Islander people.
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. Responsibility for the IPP transferred from the Department of the Prime Minister and Cabinet (PM&C) to the newly created National Indigenous Australians Agency (NIAA) on 1 July 2019 through a machinery-of-government change.
In 2017 the Senate Finance and Public Administration References Committee (the committee) held an inquiry into the Community Development Program. The committee recommended that the Australian National Audit Office (ANAO) conduct an audit of Australian Government contracts that relate to service delivery in remote locations with a specific focus on the use of, and compliance with, Aboriginal and Torres Strait Islander employment targets.
The audit objective was to assess the effectiveness of the administration of the MMRs for Aboriginal and Torres Strait Islander participation in major government procurements in achieving policy objectives.
To form a conclusion against the audit objective, the ANAO adopted the following high level audit criteria:
- Are the MMRs designed to achieve the government’s policy objectives?
- Are the MMRs being implemented and monitored effectively?
- Are entities complying with the MMRs in major procurements?
- While the MMRs for Aboriginal and Torres Strait Islander participation were effectively designed, their administration has been undermined by ineffective implementation and monitoring by the policy owner and insufficient compliance by entities.
- The design of the MMRs supports the achievement of the government’s policy objectives. The MMR policy settings are reasonable and supported by evidence.
- The MMRs have not been implemented and monitored effectively due to inadequate implementation planning and delays in establishing a centralised monitoring system. While the policy owner has publicised the MMRs, it has not provided entities and contractors sufficient guidance on complying with the MMRs. The current regime for enforcing compliance with MMR reporting requirements is not operating effectively and, as a result, the policy outcomes have not been evaluated.