This audit would examine the effectiveness of the Commonwealth’s Indigenous Procurement Policy in stimulating business development opportunities for Aboriginal and Torres Strait Islander peoples, while maintaining value for money in government procurement. The audit would also assess the extent to which the recommendations from Auditor-General Report No. 1 of 2015–16, Procurement Initiatives to Support Outcomes for Indigenous Australians, have been implemented.

The Indigenous Procurement Policy was released on 25 May 2015 by the Minister for Indigenous Affairs and the Minister for Finance, replacing the previous Indigenous Opportunities Policy. Since its commencement, over 1000 Aboriginal and Torres Strait Islander businesses have won more than $1,084 million of government contracts.

The policy outlines a series of annual procurement targets, rising from 0.5 per cent of domestic contracts (by number) in 2015–16 to three per cent from 2019–20. It also includes a mandatory set-aside rule for contracts in remote areas and contracts between $80,000 and $200,000, whereby Aboriginal and Torres Strait Islander enterprises can be given the chance to demonstrate value for money before an approach to the market.