Who defines success? A critical analysis of the Indigenous Procurement Policy in Australia

Abstract

Launched in 2015, the Indigenous Procurement Policy (IPP) has generated significant public procurement spend towards Indigenous‐owned businesses in Australia. With government agencies exceeding their targets for Indigenous procurement, the Indigenous business sector growing, and the IPP maintaining bipartisan support, the IPP appears to stand out as an isolated area of success in federal Indigenous economic policymaking. Yet, despite operating for a decade, there has been almost no analysis of the IPP and the distribution of contracts across the Indigenous business sector. Without this analysis, it is challenging to understand the full scope of the IPP's impact and the degree to which broader aspirations for the IPP are being fulfilled. This paper analyses the distribution of Commonwealth public procurement contracts awarded to Indigenous businesses in the first 8 financial years of the IPP (2015–16 to 2022–23), using contract data provided under Freedom of Information. Though the IPP has generated procurement contracts for over 3900 Indigenous businesses, this analysis finds that over 50% of the number of contracts valued over $10,000 have been awarded to just 11 businesses, with 50% of the accumulative value of contracts over $10,000 awarded to 18 businesses. Contract flows are heavily skewed to businesses located in major cities, primarily Canberra, and to businesses in select industries. This analysis also finds that approximately three quarters of the accumulative value of contracts over the lifespan of the IPP have been awarded to businesses with 50%–51% or unreported Indigenous ownership rates. Ultimately, this analysis demonstrates the need for amendments to the IPP—including the development of a more robust and culturally accountable definition of an Indigenous business—that ensures that the economic and social outcomes of the policy match the expectations and aspirations as defined by those in the Indigenous business community. Points for practitioners This paper analyses public procurement contract data on Indigenous‐owned firms for the first 8 years of the IPP. Fifty per cent of all contracts of over $10,000 have been awarded to just 11 businesses, and 50% of the total value of all contracts have been awarded to 18 businesses. Forty‐seven per cent of the total value has been awarded to businesses of between 50% and 51% Indigenous ownership, with an additional 27% to businesses with unidentified Indigenous ownership status. Over 40% of the number and 30% of the value of contracts have been awarded to businesses in Canberra. Though the IPP has been successful in exceeding its Indigenous procurement targets, the way these targets are being met reveals limitations in the policy design. Incorporating Indigenous‐defined measures of success in the design of the IPP and adequately pricing the social value creation of Indigenous firms may better reflect the social and economic aspirations of the IPP. Enhancing Indigenous governance over how the IPP operates—including through developing a more robust, workable, and culturally accountable definition of an Indigenous business—will ensure the IPP delivers on Indigenous‐defined metrics for success.