For those of us who have been batting away to create Indigenous business opportunity for decades – in our case since 1983 – it is exciting to be part of a new positive conversation. It’s the Federal Government’s Indigenous Procurement Policy (IPP), a revolutionary inclusivity tool, which clocks up one year in operation this month.
The IPP is a quota to redress the market’s poor track record in procuring from Indigenous businesses. The inclusion piece is about enabling Indigenous businesses to participate more equitably in the national economy. It deftly removes bias. Refreshingly, it takes the Indigenous debate out of a deficit frame. It is about the benefits of diversity, where there is much to mutually learn and gain from sharing the nation’s prosperity.
The policy’s ambitious benchmark is set at 3% of new government contracts to be let to Indigenous suppliers by 2020. There is an expanding scale beginning at .5% in 2015/16. The flow down effect to State and Territory governments, and the private sector, is largely yet to be felt, but the winds of change are evident.
It is not a “nice to have”, nor a “why don’t you try” policy. It is a compliance mandatory where individual departmental results are publicly listed by the authors of the policy, the Department of Prime Minister & Cabinet. Its advantage to the Indigenous sector, is in enabling Indigenous-owned (50% minimum) SMEs to demonstrate value for money through quoting, rather than via costly tenders. Any size contracts are eligible, and the first year quota of 250 deals has been exceeded.
In remote regions, Departments are required to consider Indigenous businesses first, whatever the project value. All other domestic contracts valued between $80,000 and $200,000 must also be targeted to Indigenous businesses first – in practice, this means checking if an Indigenous business can supply and meet value, before taking the opportunity out further if not.
Larger departments have led early success. Mega organisations like Defence have long been committed to Indigenous engagement, in employment more than procurement, but there is a base of familiarity and intent to build on. And with the size and geographical spread of Defence projects, the department is well placed to sponsor the policy’s flow-on to the States and corporate Australia.
Importantly, the policy is about more than economics. The IPP can be a potent tool for social change – sharing more fully in Australia’s commercial wealth is rippling down through communities, neighbourhoods and families. Indigenous businesses very often have a broader agenda than an order book and a spreadsheet. They are the eyes and ears of what is going on in their communities, towns, States and national networks. As agents of change and hope, they have enormously valuable insights and connections. There are business-to-business benefits too, because there is typically a strong commitment from Indigenous people to share opportunity. And many, like us, run not-for-profit companies alongside the commerce, looking to apply our business thinking to new, more resilient solutions to the extreme disparity Indigenous people face across just about any social measure – like education, health, employment and incarceration.
If the aspirations of the policy are to come to fruition, it will require closely aligned leadership from governments, corporate Australia and the Indigenous business sector. Results will be robust where the Indigenous procurement agenda is core business for the entity procuring. Exponential success will come from effectively integrating procurement with Indigenous employment, community development, branding, sponsorship and public affairs. This is when dabbling will grow into engagement.
In our experience, a number of factors fosters success between Indigenous businesses and corporate and government organisations. Here are some things that make client relationships work for us:
- working with leaders who genuinely want to achieve great things in the space, and motivate long term change towards sharing Australia’s wealth
- establishing long term, key relationships where there is clear communication of objectives and goals
- aligning with genuine organisational culture, interest and passion to connect with Aboriginal and Torres Strait Islander Australia
- establishing an understanding of the perspectives and experience we bring to the table, so there is a clear picture of value
For a corporate or a government organisation starting on the Indigenous participation journey, or growing its participation, we’d say:
- enjoy the opportunity. Aboriginal and Torres Strait Islander people typically bring to business lateral thinking, creativity, optimism and a never failing sense of humour. There is great value to add to Australian business
- bear in mind how tough it is to be in business and be aware the Indigenous business sector is like any other – it represents a full spectrum from start-ups to mature enterprises. The IPP brings opportunity, but also considerable demands, particularly on newer businesses, or businesses which need to grow in order to respond to new opportunities. Consider what you can offer around trading terms, front-funding exploratory work, working with the business to incubate capacity, or tandem-hiring a related supportive business or broker
- ask the question, what does success look like for a particular procurement relationship, how can that be creatively enacted if necessary. It may not be quite business as usual. Be realistic about budgets and timeframes. Many new businesses are learning to do business, alongside delivering a client’s requirements. Success is reliant on the quality of the relationships
- equally, remember that many Indigenous businesses are fully market ready, and were running successful and substantial businesses before the IPP. It devalues the opportunity to approach IPP with a one size fits all
- be clear about the outcome the organisation is ready to embrace and use supplier forums like Supply Nation to look carefully for a provider who fits. Is the objective (1) a one-off service that is purely $s based, (2) integrated value mandated by the executive which might be a strategic build, or (3) aspirational wishes of brand and community where the result needs to roll out ongoing to networks across the State or country. If the need is for a one off service, it may be an entry point opportunity for a smaller operator, but if it’s for an integrated approach that cuts five years off an organisation’s learning curve in the Indigenous space, then track record is a better determinant
- if building capacity and long term success are the goals, it’s best to review sector activity on an annual basis and plan ahead strategically for new initiatives, don’t leave things to the last minute and rush them into Reconciliation or NAIDOC Week. The best results may be elusive if the approach is reactionary
Looking back on what the IPP – 12 months on – has done for the engagement between Indigenous business and corporate and government organisations, we’d suggest:
- compliance always focuses intent, and filters executive commitment down through the procuring entity. It has brought “nice to have” in terms of diversity goals, to “must have” in order to meet quotas
- a larger conversation has been enabled about equality of economic participation in Australian business
- there is heightened desire to achieve change in the space
- value will be increased as the Federal Government platforms of IPP increasingly formalises, and preferably, standarises, its flow-on effect to State governments and the corporate sector
- it would be very helpful to see banks brought into the IPP conversation in terms of greater financial support for Indigenous businesses. Banks are not especially friendly to small business, particularly unfriendly to entrepreneurial small business, and inflexible where lending security might fall short. This is a key consideration to the long-term success of the IPP
- there is a significant disparity between longer term procurement players in the sector, and newcomers who are grappling with how to assess value and expectations
We are proud to share the journey with our many high integrity partners in the space, and we welcome the chance to assist anyone on their genuine journey towards Reconciliation.