Indigenous business contracts grew once Commonwealth buyers faced obligations under the Indigenous Procurement Policy

Growth in Commonwealth contracting with Indigenous businesses

In 2014 to 2015, the year before the Indigenous Procurement Policy began, the Commonwealth awarded $6.2 million in contracts to Indigenous businesses. In 2024 to 2025, according to the National Indigenous Australians Agency, more than 1,200 Indigenous businesses won 13,144 new contracts worth about $1.6 billion. Across the life of the policy to February 2026, the agency reports more than $13.5 billion in contracting opportunities, with more than 86,000 contracts awarded to more than 4,700 Indigenous businesses. The figures show a very large expansion since the policy began, without on their own demonstrating that the policy caused all of it.

The growth is sometimes attributed to recognition, as though government simply became aware of Indigenous businesses and began to buy from them, although Supply Nation, which verifies Indigenous businesses, was launched in 2009, six years before the policy, and recognition was therefore already in place when the policy introduced a set of obligations on buyers in 2015.

The three obligations the policy places on buyers

The first of the three requirements the policy places on buyers is a set of targets, under which the Commonwealth and every portfolio have annual targets for the number and value of contracts with Indigenous businesses. The value target rose to 3 per cent on 1 July 2025 and will increase by 0.25 percentage points a year to reach 4 per cent in 2029 to 2030.

The second is the mandatory set aside. For contracts delivered in remote Australia, whatever their value, and for other procurements wholly delivered in Australia worth between $80,000 and $200,000 including GST, buyers must give Indigenous businesses the opportunity to demonstrate value for money before approaching the open market. This changes the sequence of the procurement process so that Indigenous businesses are considered at the outset.

The third is the mandatory minimum Indigenous participation requirements, which attach Indigenous employment or supply use obligations to contracts of $7.5 million or more in 19 industries.

None of these measures depends on the enthusiasm of an individual buyer, since a procurement officer committed to supplier diversity and one who has never considered it are subject to the same rules. The audit findings below show that rules alone do not deliver results, since verification, contract management, supplier capability and compliance all affect outcomes, but only the obligation requires buyers to act on the category when deciding where public money is spent.

Black cladding and the tightening of eligibility

Obligations that direct spending to a category also give businesses outside it an incentive to claim eligibility. A parliamentary inquiry reported in November 2024 that black cladding was occurring, with non Indigenous companies partnering with First Nations organisations that neither controlled nor benefited from the work. The government has responded by tightening eligibility. From 1 July 2026, a strengthened test of 51 per cent First Nations ownership and control, or registration as an Indigenous corporation, began to apply. During 2026 to 2027, businesses can qualify under either the original 50 per cent ownership test or the strengthened test. Supply Nation’s contract to maintain the register under the previous definition was extended for twelve months while a tender for a new verification provider ran from 13 August to 18 September 2026. A decade after the policy began, the government is still refining how it determines who qualifies, which indicates that verification remains a central and unsettled part of a policy of this kind.

Gaps in the evidence on outcomes

The policy’s reporting records contracts in detail but has shown little about what those contracts changed. In a 2025 follow up audit, the Australian National Audit Office found that an evaluation strategy for the participation requirements had been finalised but never implemented, and that the agency had not demonstrated whether those requirements were improving Indigenous economic participation. Of 116 finalised contracts carrying the requirements, 72 per cent were assessed as meeting their targets, and of 84 sampled contracts still under way, 42 per cent were on track. Contract value can be reported as soon as contracts are signed, whereas outcomes could only have been shown through the evaluation strategy, which was not implemented.

Implications for LGBTIQA+ owned businesses

The Indigenous Procurement Policy was designed for a particular population and for reasons specific to that population, and this analysis does not propose it as a template to be copied for other groups.

The policy shows that a supplier category directs spending when buyers are obliged to act on it and there is a credible way of confirming which businesses qualify. LGBTIQA+ owned businesses in Australia have neither, since no Commonwealth rule asks a buyer to consider them and no Australian body certifies them. Verification would also face an issue that the Indigenous policy encounters on different terms, namely whether owners are prepared to disclose their sexual orientation or gender identity to a register at all. Until these issues are resolved with evidence, recognising LGBTIQA+ owners in a policy document would do little to change which businesses win the work.

Sources

1. National Indigenous Australians Agency, Indigenous Procurement Policy
2. National Indigenous Australians Agency, The Indigenous Procurement Policy is changing
3. National Indigenous Australians Agency, Procurement policy generates $5.3 billion in contracts for over 2,600 Indigenous businesses, 4 November 2021
4. Australian National Audit Office, Targets for minimum Indigenous employment or supply use in major Australian Government procurements, follow up
5. The Canberra Times, Indigenous procurement policy reform lacking evidence: ANAO audit, 5 June 2025
6. UTS, DEI, supplier diversity and reconciliation in 2025: bridging now to next

Source pages last checked 19 October 2026.