Streamlining the NSW Aboriginal Procurement Policy and what it means for agencies and contractors

The existing NSW Aboriginal Procurement Policy and Aboriginal Participation in Construction Policy will merge and be replaced by a new Aboriginal Procurement Policy (the APP) on 1 January 2021.

The APP will apply to the procurement of all goods and services including construction by NSW Government agencies. The draft APP is available here.

By the end of 2021, the APP aims for:

• clusters to direct 1% of addressable spend to Aboriginal businesses;
• Aboriginal businesses to be awarded at least 3% of the total number of NSW Government goods and services contracts (excluding construction contracts); and
• an estimated 3,000 FTE employment opportunities (as relevant to the industry in which the contractor operates) for Aboriginal people through NSW Government procurement opportunities,

where "addressable spend" is a category of spend with opportunities for agencies to engage Aboriginal businesses and an "Aboriginal business" has at least 50% Aboriginal ownership and is recognised through an appropriate organisation (eg. Supply Nation or the NSW Indigenous Chamber of Commerce).

The NSW Government will publish its performance against the APP targets on www.buy.nsw.gov.au, for the NSW Government as a whole and at a cluster level.

State owned corporations, the Parliament of NSW and local councils are not obliged to comply with the APP. However, state owned corporations are encouraged to adopt aspects of the APP that are consistent with their corporate intent.

What are the key requirements of the APP for NSW Government agencies?

Aboriginal Participation Strategy

Agencies must publish an annual Aboriginal Participation Strategy describing how the agency will meet its obligations under the APP.

The strategy should identify upcoming procurement opportunities for Aboriginal participation, at a minimum in any procurements valued at $7.5 million or above. Strategies may be written at a cluster or agency level and must be published on the cluster’s website.

Minimum Aboriginal Participation Requirements

Agencies must include minimum requirements for 1.5% Aboriginal participation in all contracts valued at $7.5 million or more, which may be satisfied by one or a combination of:

• at least 1.5% of the contract value to be subcontracted to Aboriginal businesses
• at least 1.5% of the contract’s Australian based workforce (FTE, as relevant to the industry in which the contractor operates) that directly contribute to the contract to be Aboriginal employees
• at least 1.5% of the contract value to be applied to the cost of education, training or capability building for Aboriginal staff or businesses directly contributing to the contract.

The policy allows for appropriate exclusions (eg. for contracts valued over $7.5 million for specialised goods or services with very limited opportunities for Aboriginal participation) for approval by the agency’s Chief Procurement Officer.

Tender Requirements

• Agencies must require tenderers to submit an Aboriginal Participation Plan during the procurement process setting out how the tenderer plans to meet the Aboriginal participation requirements.
• Agencies must require tenderers to declare, during the procurement process, whether they have previously participated, or are currently participating, in a NSW Government contract that had Aboriginal participation requirements and, if applicable, demonstrate their compliance with the requirements. The past performance of a tenderer should be considered when assessing Aboriginal participation proposals.
• Include the final Aboriginal Participation Plan in the successful tenderer's contract, including quarterly reporting against the plan and requirements for any Aboriginal participation spend balance to be retained by the agency or directed back to the agency to distribute to Training Services NSW.

Application of the APP to low-value procurements

Whenever feasible, agencies should give first consideration to Aboriginal businesses for procurements up to $250,000 and may negotiate directly with Aboriginal businesses even if there is a mandated prequalification scheme or panel in place.

What are the key requirements of the APP for Government contractors?

Compliance with the APP

• Submit an Aboriginal Participation Plan during the tender process setting out how the contractor will meet the minimum 1.5% of contract value, or a higher percentage as agreed with the agency.
• Work with the contracting agency to successfully implement the Plan.
• Report quarterly on progress toward the Plan in the format and method required by the APP.
• Support and cooperate with audits of Aboriginal Participation Plans and reporting.
• Provide a final report on completion of the contract, including a final reconciliation against the Aboriginal participation requirements.
• If participation requirements are not met, the balance will be collected by the agency and directed to the account held by Training Services NSW. Funds cannot be transferred by contractors.

Agencies and contractors should be mindful of their obligations under the APP and prepare to update their documentation when the policy comes into effect on 1 January 2021.