Introduction

1.1 Australian governments have committed to improving economic outcomes for Aboriginal and Torres Strait Islander people under the National Agreement on Closing the Gap.¹⁰ The Indigenous Procurement Policy (IPP) was established in 2015 with the objective ‘to stimulate Indigenous entrepreneurship, business and economic development, providing Indigenous Australians with more opportunities to participate in the economy’.¹¹ When announcing the release of the IPP guidelines in May 2015, the Minister for Indigenous Affairs stated:

Through governments working more closely with Indigenous businesses, we will be able to provide the jobs, skills and training to get more First Australians into meaningful employment.¹²

1.2 As a procurement-connected policy¹³ under the Commonwealth Procurement Rules (CPRs), compliance with the IPP is mandatory for non-corporate Commonwealth entities.¹⁴ There are three key elements of the IPP.

• Procurement targets — Annual value and volume targets for the Australian Government and each Australian Government portfolio for procuring goods and services from Aboriginal and Torres Strait Islander enterprises.
• Mandatory set aside — A requirement to ‘set aside’ all remote area procurements, and all non-remote area domestic procurements, with a value of $80,000 to $200,000 (other than in certain exempt categories), to determine whether an Aboriginal and Torres Strait Islander business could deliver value for money before the procuring entity approaches the broader market.
• Mandatory minimum requirements (MMRs)¹⁵ — Targets for minimum Indigenous employment and/or supply use for high-value Australian Government contracts in certain specified industries.¹⁶

Mandatory minimum requirements

1.3 The MMRs are the third element of the IPP. The MMRs were established in July 2015 and became binding on contractors from 1 July 2016. The stated policy objective of the MMRs in 2015 was to ‘ensure that Indigenous Australians gain skills and economic benefit from some of the larger pieces of work that the Commonwealth outsources, including in Remote Areas’.¹⁷ The MMRs require targets for minimum Indigenous employment and/or supply use be included in Australian Government contracts that are:

• valued at $7.5 million or more (GST inclusive);
• in one of 19 specified industry categories (with some sub-category exemptions)¹⁸ (see Appendix 3); and
• wholly delivered in Australia.¹⁹

1.4 Once an Australian Government entity identifies that the MMRs apply to a procurement, it is required to advise tenderers of their obligations under the IPP at the approach to market stage. Tenderers can elect to apply:

• a contract-based target — a minimum of four per cent Indigenous employment and/or contractor use specifically for the contracted good or service; or
• an organisation-based target — a minimum of three per cent Indigenous employment and/or contractor use across the operations of the contractor’s Australian-based organisation.

1.5 Tenderers must specify how they plan to achieve the MMRs in an Indigenous Participation Plan, which must be considered by the entity as part of the tender evaluation process and form a schedule to the contract between the entity and the contractor. Where a component of the contract will be delivered in a remote area, the entity must ensure that there is a contractual requirement to deliver ‘significant Indigenous employment, or supplier use outcomes in that area’.²⁰ For remote-area contracts with contract-based MMR targets, the MMR target must be greater than four per cent.

Responsibilities for meeting the mandatory minimum requirements

1.6 The National Indigenous Australians Agency (NIAA) was established as an Executive Agency in 2019. Under its Executive Order, the NIAA’s responsibilities include:

• leading and coordinating the Australian Government’s policy development, program design and implementation, and service delivery for Aboriginal and Torres Strait Islander peoples; and
• analysing and monitoring the effectiveness of programs and services for Aboriginal and Torres Strait Islander people, including programs and services delivered by bodies other than the Agency.²¹

1.7 Responsibility for the IPP transferred from the Department of the Prime Minister and Cabinet to the NIAA on 1 July 2019 through a machinery-of-government change. As the policy owner for the IPP, the NIAA is responsible under the CPRs for administering, reviewing and providing information on the IPP as required. Specifically, the NIAA’s responsibilities include:

• developing and publishing the policy;
• monitoring and publishing performance information;
• administering the Indigenous Procurement Policy Reporting Solution (IPPRS), an online reporting system used to record data on MMR contracts;
• supporting entities and contractors to comply with MMR reporting requirements; and
• monitoring and reviewing the effectiveness of the policy.²²

1.8 Australian Government entities are responsible for their compliance with the IPP, including the MMRs. This involves ensuring that:

• procuring officials and contract managers understand their obligations under the IPP;
• MMR targets are included in contracts, in line with the policy intent;
• contractors report performance against MMR targets in the IPPRS²³ and that this data is complete and accurate²⁴; and
• contract managers monitor and manage contractors’ performance in achieving MMR targets.²⁵

1.9 MMR requirements through the procurement lifecycle are illustrated in Figure 1.1.

Figure 1.1: Mandatory minimum requirements — procurement and contract management process

Note a: The MMRs may apply to procurements from standing offers or panel arrangements. When establishing new panels, entities must identify in the approach to market and deed of standing offer that the MMRs will apply to procurements from the standing offer. Entities undertaking a standing offer must ask the contractor to provide, and must consider as part of the procurement evaluation, an Indigenous Participation Plan and compliance with previous MMR contracts when the contract or order meets the MMR criteria. Panel procurements to which the MMRs apply are subject to the same requirements as other procurements in the contract management, reporting and finalisation phases.

Note b: If a contract subject to the MMRs is varied, any variation to the Indigenous Participation Plan and MMR target must comply with the IPP. If a contract not subject to the MMRs is varied and the variation results in the contract meeting the MMR criteria or presents an opportunity for increased Indigenous participation in the delivery of the contract, the entity may negotiate with the contractor to voluntarily apply the MMRs.

Source: ANAO summary of NIAA documentation.

Application of the mandatory minimum requirements

1.10 As at December 2024, the NIAA’s most recent public reporting on MMR contracts²⁶ was in February 2024, based on data to 30 September 2023. The NIAA reported that, between 1 July 2016 and 30 September 2023, MMR contracts with a total value of $36.3 billion were awarded to 313 contractors.²⁷ Based on IPPRS data, as calculated by the NIAA, the total value of contracts meeting the MMR criteria over the same period was $103.9 billion. The total value of all Australian Government contracts reported to AusTender between 1 July 2016 and 30 June 2023 was $462.3 billion.²⁸

1.11 As at 30 September 2024, the IPPRS included data on 870 MMR contracts commenced between 1 July 2016 and 30 September 2024 with a total value of $45.2 billion²⁹ (Figure 1.2). The 870 contacts were held by 52 Australian Government entities. A further 1,475 contracts were exempted by entities from the MMRs over the same period.

Figure 1.2: Mandatory minimum requirements contracts by year, July 2016 to September 2024^a

Note a: Number and total value of contracts per year based on contract start dates as recorded in the IPPRS — 2016 covers the period 1 July 2016 to 30 December 2016; 2024 covers the period 1 January 2024 to 30 September 2024

Source: ANAO analysis of IPPRS data. The ANAO has not assured IPPRS data.

1.12 Table 1.1 shows the number and value of MMR contracts, and the number and value of contracts exempted from the MMRs by entities, for each Australian Government portfolio, as at September 2024 (see Table 3.1 and Figure 3.2 for further data on MMR exemptions by portfolio).

Table 1.1: Mandatory minimum requirements contracts and exempted contracts by portfolio, July 2016 to September 2024^a

Note a: Based on portfolios to which contracts are assigned in the IPPRS as at September 2024.

Source: ANAO analysis of IPPRS data. The ANAO has not assured IPPRS data.

1.13 At the commencement of an MMR contract, the relevant entity is required to set up the contract in the IPPRS to enable the contractor to report their performance against the MMR target. Set up includes specifying the assessment method (whether the contractor’s performance will be assessed against a contract-based or organisation-based target and the target level).

• Of the 870 MMR contracts between July 2016 and September 2024, 763 contracts specified an assessment method in the IPPRS. Of these, 391 contracts (51 per cent) have a contract-based target and 372 contracts (49 per cent) have an organisation-based target.³⁰
• As outlined in paragraph 1.4, contractors can elect to meet their MMR target through a contract-based target (minimum four per cent) or an organisation-based target (minimum three per cent). On average, contractors nominate to meet their MMR target through a combination of employment and supply use.
  • For the 391 MMR contracts with a contract-based target, the average sum of the Indigenous employment and supply-use components of the target was 6.3 per cent. For 12 contracts (3.1 per cent), the sum of the Indigenous employment and supply-use components of the target did not meet the minimum value of four per cent.
  • For the 372 contracts with an organisation-based target, the average sum of the Indigenous employment and supply-use components of the target was 6.0 per cent. For 29 contracts (7.8 per cent), the sum of the Indigenous employment and supply-use components of the target did not meet the minimum value of three per cent.

1.14 Once an MMR contract has ended, the relevant entity is required to make a final assessment of whether the contractor has achieved the agreed MMR target over the life of the contract. Of the 870 MMR contracts in the IPPRS shown as commencing between 1 July 2016 and 30 September 2024, 161 (18.5 per cent) had a final MMR compliance assessment recorded in the IPPRS as at September 2024. Of the 161 contracts, the contractor was assessed to have met the MMR target for 116 (72 per cent) (Table 1.2).³¹

Table 1.2: Final compliance assessment of mandatory minimum requirements contracts by portfolio, July 2016 to September 2024^a

Note a: Based on portfolios to which contracts are assigned in the IPPRS as at September 2024.

Source: ANAO analysis of IPPRS data. The ANAO has not assured IPPRS data.

External reviews of the Indigenous Procurement Policy

1.15 Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements assessed the effectiveness of the administration of the MMRs in achieving policy objectives.³² The audit examined the NIAA’s implementation and monitoring of the MMRs and six entities’ compliance with the MMRs.³³ The audit found that while the MMRs were effectively designed, their administration had been undermined by ineffective implementation and monitoring by the policy owner and insufficient compliance by entities.³⁴ The audit made six recommendations, which were agreed by the entities (see Appendix 4). The specific entities changed prior to the tabling of the audit report due to machinery-of-government changes.³⁵

1.16 In August 2021, the House of Representatives Standing Committee on Indigenous Affairs tabled its Report on Indigenous Participation in Employment and Business. The committee recommended that the NIAA, in consultation with other agencies, consider developing a ‘richer’ measurement of performance and outcomes for the IPP than the number and value of contracts awarded under the policy. The committee stated that performance measures related to employment outcomes and skills transfer would ‘bring the IPP into line with its original aims’.³⁶ The Australian Government agreed to the recommendation in March 2022 (see paragraphs 2.37 and 2.47).³⁷

1.17 In November 2024, the Joint Standing Committee on Aboriginal and Torres Strait Islander Affairs released its report Inquiry into economic self-determination and opportunities for First Nations Australians. The committee recommended that the Australian Government consider increasing the annual target for Australian Government portfolios procuring goods and services from Aboriginal and Torres Strait Islander enterprises (see paragraph 1.2) and consider the definition of an Indigenous business.³⁸ As at March 2025, the Australian Government had not tabled a response to the inquiry.

1.18 In February 2025, the Australian Government announced reforms to the IPP which addressed elements of the November 2024 parliamentary committee recommendation. The reforms include changing the definition of an Indigenous business under the IPP from 50 per cent Indigenous owned to 51 per cent Indigenous owned or controlled, to take effect from 1 July 2026. The reforms also include measures related to two of the three elements of the IPP (see paragraph 1.2). There were no changes to the mandatory set-aside.

• Procurement targets — The annual value target for the Australian Government and each Australian Government portfolio for 2025–26 will increase to three per cent (compared with 2.5 per cent under the current policy). The annual value target will increase by a further 0.25 per cent annually to 2029–30.
• Mandatory minimum requirements — the NIAA will explore the feasibility of increasing transparency of contractors’ performance against MMR targets.³⁹

Rationale for undertaking the audit

1.19 The stated policy objective of the MMRs is to ‘ensure that Indigenous Australians gain skills and economic benefit from some of the larger pieces of work that the Commonwealth outsources, including in Remote Areas’.⁴⁰ Compliance with the MMRs is mandatory for non-corporate Commonwealth entities. The MMRs were established in July 2015 and became binding on contractors from 1 July 2016.

1.20 Auditor-General Report No. 25 2019–20 was undertaken to provide assurance that the MMRs were being effectively administered and selected entities were complying with them.⁴¹ The audit concluded that while the MMRs were effectively designed, their administration had been undermined by ineffective implementation and monitoring by the policy owner and insufficient compliance by the selected entities.⁴² The audit made six recommendations to improve administration of and compliance with the MMRs, which were all agreed to.

1.21 Auditor-General reports identify risks to the successful delivery of government outcomes and provide recommendations to address them. The tabling in the Parliament of an agreed response to an Auditor-General recommendation is a formal commitment by the entity to implement the recommended action. Effective implementation of agreed Auditor-General recommendations demonstrates accountability to the Parliament and contributes to realising the full benefit of an audit.⁴³

1.22 This audit examines whether the NIAA; Department of Defence; Department of Education; Department of Employment and Workplace Relations⁴⁴; Department of Home Affairs; and Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts have effectively implemented agreed recommendations from Auditor-General Report No. 25 2019–20. Entities’ implementation of agreed recommendations will help provide assurance to the Parliament about whether the MMRs are meeting the objective of stimulating Indigenous entrepreneurship, business and economic development and providing Indigenous Australians with opportunities to participate in the economy.

Audit approach

Audit objective, criteria and scope

1.23 The audit objective was to assess whether selected entities effectively implemented agreed recommendations from Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements.

1.24 To form a conclusion against the objective, the following high-level criteria were adopted.

• Did the NIAA implement recommendations related to the administration of the MMRs?
• Does the NIAA manage exemptions to the MMRs effectively?
• Did selected entities implement recommendations related to their compliance with the MMRs?

1.25 This audit is the second of two in 2024–25 examining implementation of recommendations in the Indigenous affairs portfolio. Auditor-General Report No. 14 2024–25 Implementation of Parliamentary Committee and Auditor-General Recommendations — Indigenous Affairs Portfolio examined Indigenous Business Australia and the NIAA’s implementation of a selection of 25 other agreed parliamentary committee and Auditor-General recommendations.⁴⁵

Audit methodology

1.26 The audit involved:

• review of entities’ policies and procedures;
• examination of documentation related to a sample of MMR contracts;
• analysis of data extracted from the IPPRS and AusTender; and
• meetings with relevant entity staff.

1.27 The contract sample comprised 91 MMR contracts held by the selected entities that commenced between 1 July 2020 and 31 December 2023. Details of the contracts and the methodology used to select the sample are provided in Appendix 5.

1.28 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $454,000.

1.29 The team members for this audit were Ashley Stephens, Rebecca Storen, Benjamin Foreman, Jillian Hutchinson, Lily Engelbrethsen, Kai Clark, Megan Cook, Jennifer Eddie and Christine Chalmers.

2.1 In June 2024, the Public Service Act 1999 (PS Act) was amended to specify ‘stewardship’ as one of the Australian Public Service (APS) Values, which members of the APS are required to uphold. The PS Act defines the value of stewardship as ‘The APS builds its capability and institutional knowledge, and supports the public interest now and into the future, by understanding the long-term impacts of what it does.’⁴⁶

2.2 The Department of Finance’s guidance on procurement-connected policies states that the entity responsible for the policy must:

• provide advice on the policy to Australian Government entities and other stakeholders⁴⁷; and
• actively monitor the policy and have an appropriate regime for addressing non-compliance.⁴⁸

2.3 The Australian Government’s Commonwealth Evaluation Toolkit describes an evaluation as a structured assessment of the value of government programs or activities, aimed at supporting improvement, accountability, and decision-making throughout the policy cycle.⁴⁹ The Commonwealth Evaluation Policy provides principles for the conduct of evaluations.⁵⁰

2.4 Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements made three recommendations directed at the NIAA relating to the NIAA’s administration of the MMRs (Table 2.1 and Appendix 4). The NIAA agreed to the recommendations and made additional commitments in its response (see Box 1, Box 2 and Box 4).⁵¹ The ANAO’s assessment of the NIAA’s implementation of the three recommendations considered whether there was supporting evidence that the agreed action had been undertaken and the action met the intent of the recommendation as agreed (Table 2.1).

Table 2.1: Assessment of the NIAA’s implementation of agreed recommendations relating to administration of the mandatory minimum requirements

Note a: The NIAA agreed to all recommendations.

Note b: The date is when the NIAA advised its Audit and Risk Committee that the recommendation was closed. The ANAO has taken closure of the recommendation to indicate that the recommendation was considered by the NIAA to be implemented unless closure documentation stated otherwise.

Note c: The ANAO’s assessment differed from the NIAA’s assessment for the recommendations highlighted in the table.

Source: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements and ANAO analysis of NIAA documentation.

Was tailored guidance developed that was based on stakeholder consultation?

Note a: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, paras. 3.9–3.14.

Note b: ibid., paras. 4.11, 4.47.

Note c: ibid., paras. 3.17–3.18.

Stakeholder consultation on revised guidance

2.5 In February 2019, the Australian Government announced changes to the Indigenous Procurement Policy (IPP), including the expansion of the MMRs to new industry categories (see paragraph 1.3). In December 2019, the NIAA developed an implementation plan to support the NIAA’s implementation of the changes, which included a timeframe for planned activities and a risk assessment. The implementation plan stated guidance would be developed in consultation with Australian Government entities, the NIAA regional network⁵², Supply Nation⁵³, major contractors and Indigenous businesses. Deliverables included ‘tailored guidance’ for three audiences: ‘Commonwealth buyers’; Indigenous businesses; and major contractors. The plan stated the guidance would be published on the NIAA website by March 2020.

2.6 Following the tabling of Auditor-General Report No. 25 2019–20 in February 2020, between March 2020 and May 2020, the NIAA revised the implementation plan to include:

• new activities, or additional details for existing activities, in response to the ANAO recommendations;
• a more detailed timeline and extension of the timeframe for publication of the guidance to June 2020⁵⁴; and
• additional details on stakeholder communication activities. There was a stakeholder consultation plan, which identified three stakeholder groups: procurement officials and contract managers; suppliers; and other ‘key stakeholders’.⁵⁵ The plan stated that consultation would involve written feedback and meetings, and that consultation with Australian Government entities would occur through an existing IPP Cross Agency Working Group.⁵⁶ The plan stated that stakeholders would receive feedback.

2.7 In May 2020, the NIAA undertook consultation on three draft MMR guides targeted at procuring officials, contract managers and contractors. NIAA sought written feedback within one to two weeks from 17 Australian Government entities⁵⁷, eight contractors, Supply Nation and NIAA regional managers, and held three meetings with procuring officials, contract managers and NIAA regional managers. Suggestions in feedback included changes to improve clarity and consistency; additional examples and case studies; and additional information on topics such as applying the MMRs to contract variations, assurance over MMR performance reporting, and assessment of contractors’ past MMR performance.

Development of revised guidance

2.8 In June 2020, the NIAA finalised changes to the draft MMR guides in response to stakeholder feedback, including combining the procuring officials’ and contract managers’ guides and adding additional examples and case studies. Changes largely addressed feedback, but did not include adding information on assurance over MMR performance reporting.

2.9 In June 2020, the NIAA provided a revised IPP to the Minister for Indigenous Australians (the minister). The NIAA advised the minister that the revised policy reflected changes made to the IPP since its establishment in 2015 and clarified details related to the application of the MMRs to panel procurements; contracts wholly or partly delivered overseas; and contracts subject to variations. The NIAA also advised the minister that it was developing guidance material for entity officials, major contractors and Indigenous businesses.⁵⁸ In July 2020, the minister approved the revised IPP and agreed to issue a media release about it and planned guidance material.⁵⁹

2.10 In July 2020, the NIAA published the revised IPP and two new MMR guides (one for Australian Government officials and one for potential suppliers).⁶⁰ The NIAA also updated two existing guides (a guide for contractors on using the Indigenous Procurement Policy Reporting Solution (IPPRS); and a guide for procuring officials and contract managers on model clauses⁶¹ for procurements subject to the MMRs). In July 2020, the NIAA sent the new and existing guides to members of the IPP Cross-Agency Working Group.⁶² The NIAA issued a media release that referred to the guides⁶³ and promoted the guides in the August 2020 issue of the Department of Finance’s Procurement Bulletin.⁶⁴ The NIAA circulated the guides to contractors for new MMR contracts via the IPPRS from June 2021.⁶⁵

2.11 In July 2020, the NIAA closed the ANAO recommendation. The closure report noted that a guide tailored for Indigenous businesses was under development. The closure of the recommendation was approved by the NIAA Audit and Risk Committee in September 2020.

2.12 As at March 2025, the NIAA had not updated its published guidance for procuring officials, contract managers and contractors since July 2020. The guidance did not reflect changes made to the process for managing MMR reporting in the IPPRS since July 2020 (see paragraph 2.26). The NIAA had not published tailored guidance for Indigenous business in line with its response to the recommendation in February 2020 (see Box 1) and advice to the minister in June 2020 (see paragraph 2.9). In May 2024, the NIAA advised the ANAO that the guide was deprioritised due to resourcing constraints and other resources available to Indigenous businesses. As at March 2025, the NIAA’s website stated that the Indigenous business guide was ‘currently under development’.⁶⁶

Adequacy of revised guidance

2.13 The ANAO assessed whether the guidance published by the NIAA in July 2020 addressed the 14 topics identified in Auditor-General Report No. 25 2019–20 as requiring additional guidance (see Table 2.2). The guidance addressed 13 of the 14 topics. Five addressed topics had incomplete information. Guidance directed at contract managers was incomplete.

2.14 Incomplete guidance related to three themes:

• exemptions from the MMRs (applying exemption categories for the MMRs);
• managing performance reporting (managing MMR performance reporting through the IPPRS); and
• assurance over MMR performance reporting (building checks into existing contract management processes to gain assurance of MMR performance reporting; undertaking risk-based compliance and enforcement activities; requesting evidence of identification from staff and suppliers in a culturally appropriate manner; and documentation that should be retained as evidence of reported MMR performance).

Table 2.2: Assessment of completeness of mandatory minimum requirements guidance^a, as at December 2024

Key: ■ Topic not addressed in guidance ▲ Topic partly addressed in guidance ◆ Topic fully addressed in guidance.

Note a: Unless otherwise indicated, topics requiring additional guidance were identified in Table 3.1 in Auditor-General Report No. 25 2019–20. Two additional topics were identified in two other paragraphs in the same report, as indicated in brackets in the table.

Source: ANAO analysis of the NIAA’s MMR guidance material. (NIAA, Indigenous Procurement Policy (IPP) [Internet], available from https://www.niaa.gov.au/our-work/employment-and-economic-development/indigenous-procurement-policy-ipp [accessed 6 December 2024].)

Guidance on exemptions from the mandatory minimum requirements

2.15 Guidance for procuring officials outlines circumstances in which procurements are exempt from the MMRs and states that certain exempt contracts will need to be ‘filtered out’ of the IPPRS. Separate IPPRS online help provides instructions for exempting contracts in the IPPRS. There is no guidance on the use of the available exemption categories or documentation that should be retained to support exemptions.

Guidance for managing performance reporting

2.16 Guidance for contract managers provides an overview of MMR reporting requirements, including a link to IPPRS online help. Online help provides detailed instructions on using the IPPRS to manage contractors’ MMR performance reporting. The guidance and online help do not:

• explain how contract managers should acknowledge their review of quarterly performance reports for contracts with organisation-based MMR targets (see paragraph 1.4 and Box 3);
• establish timeframes for entities to set up contracts for reporting in the IPPRS⁶⁷; or
• establish timeframes for finalising reporting for contracts that have ended.

2.17 Guidance for contractors states that contractors should maintain records to support claims relating to Indigenous employment, Indigenous supply use and the Indigeneity of businesses that are not registered with the Office of the Registrar of Indigenous Corporations⁶⁸ or Supply Nation. It does not provide specific examples of suitable evidence or guidance on how long records should be retained.

Guidance for obtaining assurance over performance reporting

2.18 Auditor-General Report No. 25 2019–20 identified that a key topic requiring additional guidance related to assurance over reported MMR performance. The report stated:

NIAA needs to provide additional guidance to entities on building checks into existing contract management processes to gain assurance of MMR performance reporting and undertaking risk-based assurance activities. This guidance should include advice to entities and contractors about how to request evidence of identification from staff and suppliers in a culturally appropriate manner.⁶⁹

2.19 The NIAA’s guidance published in July 2020 included limited information to assist contract managers to gain assurance over contractors’ reported MMR performance⁷⁰, undertake risk-based compliance and enforcement activities⁷¹, and request evidence from contractors in a culturally appropriate manner.

2.20 In July 2023, the NIAA advised the Chief Operating Officers (COO) Committee⁷² that it was not clear whether entities were verifying contractors’ information on Indigenous employment and supply use and noted that some agencies had foreshadowed their intention to strengthen their MMR assurance processes. In June 2024, the NIAA again advised the COO Committee that it was still not clear whether entities were verifying reported performance information. The NIAA advised the committee that consultations on IPP reforms (see paragraph 2.41) had ‘indicated an appetite for more robust assurance activities in relation to the IPP, including verification of MMR reported outcomes’. The NIAA advised the committee about eight ‘compliance risks’ and mitigations; suitable evidence; and factors that could increase the risk of contractor non-compliance.

Was a reporting strategy implemented?

Note a: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, February 2020, paras. 3.28–3.34.

Note b: ibid., paras. 3.28, 3.30.

Note c: Department of the Prime Minister and Cabinet, Third Year Evaluation of the Indigenous Procurement Policy, August 2019, p. 51.

Note d: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, February 2020, paras. 3.35–3.39.

Development of a strategy to increase compliance with reporting requirements

2.23 Between December 2019 and May 2020, the NIAA developed an implementation plan (see paragraphs 2.5 to 2.6) that included activities related to improving MMR reporting compliance. The plan included a risk assessment, with three of eight risks directly related to the IPPRS.⁷³ Planned activities included system upgrades to the IPPRS, automated compliance emails in the IPPRS, quarterly reporting of reporting compliance to the IPP Cross Agency Working Group, and training and information resources to support users to upload reporting data to the IPPRS. All except training (which was described as ongoing) was to be completed by 30 September 2020. The implementation plan did not include specific performance measures in relation to MMR reporting compliance. It included a deliverable ‘Proactive compliance regime leading to improved MMR compliance rate on the IPPRS’.

2.24 Between December 2019 and August 2020, the NIAA sought quarterly updates from entities on their MMR reporting compliance through the IPP Cross Agency Working Group. In May 2020, the NIAA Chief Executive Officer (CEO) wrote to departmental secretaries about requirements under the IPP, stating that compliance with reporting requirements was ‘underwhelming’. The CEO requested that entities implement ‘enhanced mechanisms’ to ensure compliance with the IPP. In June 2020, the NIAA presented to an Indigenous affairs inter-departmental committee and the COO Committee (see paragraph 2.20) on the matter.⁷⁴

2.25 In July 2020, the NIAA closed the ANAO recommendation. The closure report stated that the actions taken by the NIAA had addressed the risk identified by the ANAO that the ‘regime in place for enforcing compliance with MMR reporting requirements was not operating effectively’. The closure report stated that ‘active reporting rates in the IPPRS’ were 49 per cent at 27 July 2020 and that upgrades to the IPPRS would be implemented in 2020–21. The closure of the recommendation was approved by the NIAA Audit and Risk Committee in September 2020.

2.26 Upgrades to the IPPRS aimed at increasing compliance with MMR reporting requirements occurred from June 2020.⁷⁵

• In June 2020, functionality was added to send automatic emails to entity contract managers and portfolio IPP managers⁷⁶ when more than two quarterly performance reports submitted by the contractor were not acknowledged by the entity, and when a contract was ready for final assessment but there were outstanding quarterly performance reports.
• In July 2020, the NIAA Resources Committee⁷⁷ approved funding of $650,000 in capital expenditure and $563,000 in operating expenditure in 2020–21 for upgrades to the IPPRS.
• In December 2020, changes were made to allow entity contract managers to receive, acknowledge and finalise contractors’ quarterly performance reports and make the final assessment of contractors’ performance via email, removing the need for contract managers to access the IPPRS for these reporting requirements. Functionality was added to automatically email quarterly performance reports to contract managers.
• In March 2021, progress indicators for workforce and supply-chain performance were added for contract- and organisation-based MMR targets. The progress indicators were included in automatic emails sent to contract managers with contractors’ quarterly performance reports.⁷⁸
• In June 2021, functionality was added to send automatic emails to entity contract managers and contractors where a contract was identified as being at risk of not meeting the agreed MMR targets.
• In December 2023, changes were made to simplify the process for contractors to enter workforce data in the IPPRS, and an overall progress indicator was added, which combined progress indicators for workforce and supply-chain performance.

Note a: The template for portfolio agencies to report on reporting compliance for MMR contracts (see paragraph 2.28) includes a field for agencies to identify any improvements they would like to see in the IPPRS to facilitate compliance.

Note b: The November 2023 survey included questions about satisfaction with support from the NIAA (respondents were asked to indicate their satisfaction with IPPRS training, IPPRS online help, the IPPRS mailbox and IPPRS telephone help) and a free-text feedback question regarding the NIAA’s IPP support. The NIAA received 17 responses.

Note c: The entities were the Department of Health, Disability and Ageing, the Department of Social Services and the Department of the Treasury.

Note d: The Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts advised the ANAO in November 2024 that procurement officials in the department had not been able to access the IPPRS since the first half of 2024. The department advised the ANAO that it had not been able to resolve the issue and was required to provide its MMR reporting data to the NIAA via email to be uploaded to the IPPRS.

Note e: The NIAA advised the ANAO in October 2024 that functionality for reviewing quarterly performance reports for contracts with organisation-based MMR targets was complicated by the fact that contractors can submit reports against multiple contracts with different contract managers, and that the NIAA determined it would be impractical to implement this functionality.

Note f: The NIAA advised the ANAO in October 2024 that contract managers’ acknowledgement that they have reviewed quarterly performance reports could be documented by entities outside of the IPPRS.

Note g: In February 2024, the NIAA updated data on Australian Government procurement outcomes on the IPP website, stating that the data was revised ‘due to a small number of misidentified contracts being previously included in calculations’. (NIAA, Indigenous Procurement Policy (IPP) [Internet], available from https://www.niaa.gov.au/our-work/employment-and-economic-development/indigenous-procurement-policy-ipp [accessed 6 December 2024].)

Note h: The ‘Contract-Based Assessment’ section of the IPPRS online help website comprises 14 main pages. As at December 2024, 53 of the 56 hyperlinks (95 per cent) in the body of the pages were inactive (that is, they resulted in an error that stated ‘the requested page could not be found’).

Mandatory minimum requirements reporting completeness

2.27 In February 2021, the NIAA CEO received an internal briefing on the activities undertaken and planned to improve compliance with MMR reporting requirements. The update stated that more than 80 per cent of contract managers that used the IPPRS had received training on system upgrades and that ‘compliance rates for MMR reporting’ were 60 per cent.⁷⁹ In September 2021, the NIAA CEO was advised that MMR reporting compliance had ‘stalled’ and that the NIAA did not know whether agencies were verifying the accuracy of performance reports in the IPPRS. The advice recommended and the CEO agreed that the NIAA approach the COO Committee to establish a process for reporting on portfolio MMR reporting compliance to ‘create a degree of “peer pressure” at a senior level’ and stated that the NIAA would establish a process to give a ‘non-compliant’ rating to contracts that had ended without completed reporting. The non-compliant rating functionality was added to the IPPRS in October 2023.

2.28 In February 2022, the NIAA advised the COO Committee that, while compliance had increased following Auditor-General Report No. 25 2019–20, it had since plateaued. The NIAA proposed that portfolios provide six-monthly compliance reports to the committee to increase visibility of MMR outcomes and areas of non-compliance warranting further attention, using a reporting template. Based on the data reported in the template, the NIAA provided compliance reports to the COO Committee annually from 2022 to 2024 (see Table 2.3 and Appendix 6). The calculation did not take into account contracts that were not set up to enable reporting, and therefore over-stated reporting compliance rates. On each occasion it received the compliance reports, the COO Committee agreed to continue to focus on improving MMR reporting compliance. The committee did not agree to any specific actions.

Table 2.3: Mandatory minimum requirements reporting compliance as reported to Chief Operating Officers Committee, 2022 to 2024

Note a: Entities are required to set up contracts in the IPPRS to enable contractors to commence submitting quarterly performance reports against agreed MMR targets. This includes entering contact details for the contractor and specifying the Indigenous employment and contractor-use components of the MMR target.

Note b: Excludes contracts not set up to enable reporting.

Note c: In requesting compliance reports from entities, the NIAA defined compliance with reporting requirements as ‘reporting up to date’.

Source: NIAA documentation.

2.29 In June 2024, the NIAA advised the COO Committee that the requirement for entities to consider past performance when evaluating tenders is the primary mechanism to drive contractors to comply with the MMRs and work was still required to improve MMR reporting compliance, particularly in relation to finalising reporting for contracts that had ended. The NIAA reported to the COO Committee that, as at June 2024, of the 203 MMR contracts that had ended, 70 contracts (34 per cent) had not had their reporting finalised. Of these, 68 contracts ended in previous financial years.

2.30 The NIAA stated in its response to the ANAO recommendation that it would aim to improve MMR reporting compliance to a level consistent with reporting compliance for Australian Government procurement more generally. Auditor-General Report No. 11 2022–23 Australian Government Procurement Contract Reporting — 2022 Update found that in 2021–22, 90 per cent of all Australian Government contracts were reported on AusTender within the required timeframe.⁸⁰ As at June 2024, based on NIAA reporting to the COO Committee, the ANAO calculated that 72 per cent of MMR contracts in the reporting phase were compliant with MMR reporting requirements.⁸¹

2.31 In June 2024, the NIAA advised the COO Committee that, of the 133 MMR contracts that had received a final compliance assessment as at June 2024, 101 contracts (76 per cent) were successful in achieving the MMR target. The NIAA does not publish information on the achievement of MMR targets. In February 2025, the NIAA advised the ANAO that publishing target data may require changes to entities’ contracts to ensure consent has been obtained from contractors to publish the information. The NIAA’s model clauses guidance has a proposed contract clause that notes ‘the Contractor acknowledges and agrees that the reports it submits … will be recorded in the IPPRS … and may be made publicly available’.⁸² In February 2025, the Australian Government announced that the NIAA would explore the feasibility of increasing transparency of suppliers’ performance against MMR targets (see paragraph 1.18).⁸³

Was an evaluation strategy implemented?

Note a: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, ANAO, February 2020, paras. 3.40–3.44.

Note b: ibid., paras. 3.46–3.47.

Development of an evaluation strategy for the mandatory minimum requirements

2.33 In September 2020, the Business and Economic Policy Branch sought endorsement from the Program Performance Committee⁸⁴ to develop an ‘IPP-MMR evaluation strategy’, advising that the policy’s underlying logic that increased opportunities to Indigenous business would have positive economic and social impacts had had limited verification. The Program Performance Committee requested that the proposal be aligned with an NIAA-wide performance monitoring and evaluation framework under development. In September 2020, the Policy and Delivery Committee⁸⁵ agreed to a proposal from the Business and Economic Policy Branch to develop a monitoring and evaluation framework for the IPP, including the MMRs, leading to a ‘full evaluation’ of the IPP in 2022–23.

2.34 The MMR evaluation strategy was approved by the CEO in December 2020. The strategy included indicative dates for the development of the separate IPP monitoring and evaluation framework and evaluation of the IPP, but not for the evaluation of the MMRs.

2.35 In January 2021, the NIAA closed the ANAO recommendation. The closure report stated that with the approval of the MMR evaluation strategy by the CEO, ‘NIAA has completed implementation of the agreed response actions under this recommendation’.⁸⁶ The closure of the recommendation was approved by the NIAA Audit and Risk Committee in March 2021.

2.36 In March 2021, the NIAA contracted Inside Policy to develop and test the broader IPP monitoring and evaluation framework by 1 July 2021, at a total contract value of $149,995 (GST inclusive).⁸⁷ In March 2022, Inside Policy provided the NIAA with a draft framework. The NIAA advised the ANAO in July 2024 that, although it continued to be marked as draft, the framework was approved in April 2022. The NIAA advised the ANAO in January 2025 that it could not locate any documents related to testing the monitoring and evaluation framework, which was a deliverable under the contract.

2.37 In March 2022, the Australian Government made a commitment to evaluate the IPP in 2022–23 in its response to the House of Representatives Standing Committee on Indigenous Affairs’ Report on Indigenous Participation in Employment and Business, which was tabled in the Parliament in August 2021.⁸⁸

Implementation of evaluation of the mandatory minimum requirements

2.38 The IPP was reviewed in November 2017 (‘year one’ review) and December 2019 (‘year three’ evaluation) by the Department of Prime Minister and Cabinet.⁸⁹ The MMRs were out of scope for the ‘year one’ review and the ‘year three’ evaluation did not measure the impact of the MMRs due to incomplete reporting data.

2.39 In December 2020, the NIAA committed $300,000 and an estimated $375,000 of in-kind support over three years for a University of Melbourne project to evaluate the economic impact and benefits to the Indigenous community of Indigenous preferential procurement programs.⁹⁰ Internal NIAA advice stated that the project would align with and complement the IPP monitoring and evaluation framework. The University of Melbourne published three ‘snapshot studies’ of the Indigenous business sector between 2021 and 2024.⁹¹

2.40 The NIAA did not implement the MMR evaluation strategy finalised in December 2020 or the draft IPP monitoring and evaluation framework developed in March 2022. The NIAA advised the ANAO in May 2024 that the evaluation of the IPP in 2022–23 was ‘set aside’ due to work on reforms to the IPP.⁹²

2.41 In December 2023, the NIAA released a discussion paper on IPP reform for public consultation, which closed in March 2024. The discussion paper stated the MMRs ‘have done well to get employment outcomes’ and that the average Indigenous employment rate for MMR contracts was 4.5 per cent.⁹³ The discussion paper stated that the purposes of IPP reforms were:

to create more opportunities for First Nations businesses through Commonwealth procurement processes [and] to contribute more meaningfully to the outcomes set out in: the National Agreement on Closing the Gap [and] the Government’s recently announced Buy Australian Plan.⁹⁴

2.42 In February 2025, the Minister for Indigenous Australians announced changes to the IPP to commence from July 2025 (see paragraph 1.18).

2.43 Advice to the government in December 2022 stated that a formal evaluation of the IPP would occur three years after any changes to the policy were implemented.⁹⁵ Advice to the government in February 2025 proposed that the IPP monitoring and evaluation framework would be refreshed to reflect changes to the policy, and that an evaluation of the IPP would commence in 2028–29.

2.44 The Department of Finance’s guidance on procurement-connected policies states that the responsible entity must actively manage the policy, conduct annual reviews of the policy’s effectiveness in achieving its stated purpose and outcomes and notify the Minister for Finance of the outcome.⁹⁶ The guidance also states that a policy’s status as a procurement-connected policy lapses after five years and that, prior to this, the responsible entity should review the reasons for the policy’s status and reapply to the Australian Government through the Minister for Finance for the status, if appropriate.⁹⁷ The NIAA should have reapplied by June 2024. As at December 2024, the NIAA had not reviewed the reasons for the IPP’s status as a procurement-connected policy or reapplied for this status. In January 2025, the NIAA advised government on extending the IPP as a procurement-connected policy.

Mandatory minimum requirements performance monitoring and reporting

2.46 In relation to the first component of the IPP (procurement targets), the NIAA publishes information annually on its website on the volume and value of Australian Government contracts awarded to Indigenous businesses (Figure 2.1).⁹⁸ As at April 2025, the latest available data was for 2022–23. For 2022–23, the NIAA reported that the Australian Government and all portfolios exceeded their 2022–23 targets in terms of both volume and value.

Figure 2.1: Number and value of Australian Government contracts with Indigenous businesses, 2016–17 to 2022–23, as at 27 February 2024^a

Note: The contract target is three per cent of the number and 1.75 per cent of the value of ‘accessible’ contracts.

Note a: As at 17 March 2025, number and value of Australian Government contracts with Indigenous businesses for 2023–24 had not been published on the NIAA’s website.

Source: Department of the Prime Minister and Cabinet and National Indigenous Australians Agency, Indigenous procurement policy, for 2022–23 available from https://www.niaa.gov.au/our-work/employment-and-economic-development/indigenous-procurement-policy-ipp [accessed 13 March 2025] and for prior years retrieved from Trove.

2.47 The information does not go to the effectiveness of the IPP in achieving its stated objective (which is to ‘stimulate Indigenous entrepreneurship, business and economic development, providing Indigenous Australians with more opportunities to participate in the economy’). An August 2021 report from the House of Representatives Standing Committee on Indigenous Affairs’ inquiry into Indigenous participation in employment and business notes that:

while there was considerable anecdotal evidence provided to the inquiry to suggest that growth in Aboriginal and Torres Strait Islander enterprises was accompanied by growth in Aboriginal and Torres Strait Islander employment outcomes, various stakeholders noted that this was difficult to substantiate without empirical data.⁹⁹

2.48 In March 2022, the Australian Government agreed to a parliamentary committee recommendation to consider developing a richer measurement of performance and outcomes for the IPP than contract numbers and value. In November 2024, the NIAA advised the Audit and Risk Committee that implementation of this recommendation was ongoing ‘noting that work is continuing for the [IPP] reform process’.

2.49 In relation to the third component of the IPP (the MMRs), the NIAA publishes annually on its website a list of companies with active MMR contracts.¹⁰⁰ Unlike for the procurement targets, the NIAA’s public reporting on the MMRs does not provide further information on performance against targets. There is also no information about the MMRs’ effectiveness.

2.50 The NIAA’s Corporate Plan 2024–25 includes a performance measure with two targets relating to the NIAA’s contribution to the effective implementation of the IPP across the Australian Public Service.

• The first target refers to the NIAA’s ‘stewardship, advice, engagement and guidance’ on the IPP. The 2023–24 annual report reported that this performance measure was ‘substantially achieved’. Evidence to support the result was based on a ‘customer satisfaction survey’ circulated to procurement staff in 17 Australian Government entities (see Box 3).
• The second target relates to procurement targets (the first component of the IPP) and is ‘Portfolios achieve their annual targets, as set out in the IPP’. In 2023–24, the second target was reported as being ‘substantially achieved’ on the basis that 16 of 17 Australian Government portfolios met their annual procurement target.¹⁰¹

2.51 Neither target specifically addresses the two components of the IPP that relate to mandatory set aside or MMRs (see paragraph 1.2).

3.1 Policy exemptions need to be appropriately designed, applied and reported.

• Design — The design of policy settings such as coverage and exemption criteria is important because inappropriate settings can lead to inconsistent application of the policy requirements, unintended consequences and failure to achieve desired policy outcomes.
• Application — Even if appropriately designed, inappropriate application of exemption criteria may allow circumvention of a policy, impeding the achievement of desired policy outcomes.
• Reporting — Where exemption criteria are used, inaccurate reporting may obscure understanding of how a policy is being applied, and the degree of policy non-compliance.

Note a: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, ANAO, February 2020, paras. 2.24, 3.28 and Figure 2.1. Auditor-General Report No. 25 of 2019–20 noted at paragraph 2.24 that the ‘other’ category was used in part to exclude procurements that pre-dated the requirement. In June 2020, after the audit was completed, a separate category to account for this type of exemption was created.

Note b: ibid., para. 4.19 and Table 4.2.

Note c: ibid., para. 4.11.

Have exemptions been appropriately managed?

3.2 Contracts published on AusTender are imported to the IPPRS and the IPPRS automatically assesses whether the MMRs apply to the contract based on: industry category; contract start date; contract value; and whether the procurement was subject to paragraph 2.6 of the Commonwealth Procurement Rules (see paragraph 1.3). The NIAA’s guidance for Australian Government entities states that contracts delivered overseas or where less than half the value of the contract is in the 19 specified industry categories will need to be exempted by the relevant entity.¹⁰² The IPPRS online help website states that ‘When exempting or removing an exemption from a contract, a justification for the exemption must be provided. In some cases, an additional text reason is also required’.¹⁰³

3.3 For contracts meeting MMR criteria and automatically imported to the IPPRS, within the IPPRS entities can exempt contracts from the MMRs. As at September 2024, of the 2,345 contracts in the IPPRS from July 2016 to September 2024, 1,475 contracts (63 per cent) valued at $69.3 billion were made exempt by the relevant entity. This is higher than the exemption/exclusion rate of 41 per cent previously found in Auditor-General Report No. 25 2019–20 (see Box 5). Thirty-eight contracts (three per cent of the 1,475 exempted contracts) were exempted when the contract was in the reporting phase. Of the 91 contracts selected by the ANAO to examine in this audit (see Appendix 5), six contracts were exempted from the MMRs by the relevant entities during the course of the audit.¹⁰⁴

3.4 Table 3.1 lists the number and value of exempt contracts between July 2016 and September 2024 for each Australian Government portfolio, as well as the percentage of total contracts in the IPPRS that were exempted. As a percentage of total contracts, the portfolios with the highest exemption rates were Foreign Affairs and Trade (90 per cent); Agriculture, Fisheries and Forestry (86 per cent); Education (82 per cent); and Industry, Science and Resources (82 per cent).

Table 3.1: Mandatory minimum requirements exempted contracts by portfolio, July 2016 to September 2024, as at September 2024

Note a: Based on portfolios to which contracts are assigned in the IPPRS as at September 2024.

Source: ANAO analysis of IPPRS data. The ANAO has not assured IPPRS data.

3.5 The NIAA advised the ANAO in October 2024 that it provides advice to entities on the use of exemptions on request, but does not have a process for validating exemptions, and that it does not undertake checks to provide assurance that exemptions are appropriate. The NIAA advised the ANAO in January 2025 that the ‘NIAA has resourced the IPP as a devolved policy in line with decisions of government and is not currently resourced to operate an audit function to investigate non-compliance’. The NIAA advised the ANAO in January 2025 that it was ‘aware of the prevalence of MMR contract exemption’. The NIAA has not analysed or reported on the use of exemptions by entities, or considered the implications of inappropriate usage.

3.6 Entities can exempt possible MMR contracts based on six exemption categories as at March 2024. The first five of the six categories accord with sections 4.2–4.3 of the IPP.

1. Non-mandated agency — The contracting entity is not a non-corporate Commonwealth entity and is therefore not required to comply with the IPP.

2. Approach to market prior to 1 July 2020 — The contract is in one of the 11 additional industry categories covered by the MMRs from 1 July 2020, but the approach to market pre-dated the policy change.¹⁰⁵

3. Commonwealth Procurement Rules set aside under paragraph 2.6 — The entity’s accountable authority set aside the CPRs under paragraph 2.6 for the procurement and therefore the MMRs do not apply.

4. International delivery — The contracted good or service is not wholly delivered in Australia and therefore the MMRs do not apply.

5. Original value below MMR threshold — A contract variation brought the total value of the contract to $7.5 million or more (GST inclusive), but the contracting entity and contractor did not agree to introduce MMR targets.

3.7 The sixth category — ‘other’ — does not align with a specific exemption under the IPP and is not defined. As discussed in paragraph 2.15, there is no published guidance on what ‘other’ may include.

3.8 Of the 1,475 exempted contracts, 499 contracts (34 per cent, or 21 per cent of all contracts in the IPPRS) used the justification ‘other’ for the exemption. This is lower than in 2019–20 when the comparable rate was 76 per cent (see Box 5). Reasons for the lower usage rate of the ‘other’ category over time may be the addition in June 2020 of the separate category ‘Approach to market prior to 1 July 2020’ (which provided, for the first time, an option for contracts that pre-dated the IPP requirement). Contracts exempted for ‘other’ reasons were valued at $30.2 billion.

Figure 3.1: Reasons for mandatory minimum requirements exemptions, July 2016 to September 2024, as at September 2024

Source: ANAO analysis of IPPRS data.

3.9 Figure 3.2 shows the six exemption justification categories by portfolio. The highest use of the ‘other’ exemption for exempted contracts was in the portfolios of Defence (59 per cent); Education (52 per cent); Climate Change, Energy, the Environment and Water (47 per cent) and Veterans’ Affairs (47 per cent).

Figure 3.2: Use of mandatory minimum requirements exemption justification categories by portfolio, July 2016 to September 2024^a, as at September 2024

Note a: Based on the number of contracts in each of the exemption justification categories as a proportion of the total number of exempt contracts.

Source: ANAO analysis of IPPRS data. The ANAO has not assured IPPRS data.

3.10 The NIAA advised the ANAO in October 2024 that the ‘other’ category includes contracts for which there is no valid exemption under the IPP, but which do not include MMR targets as these were not established by entities in the procurement process. Contracts that are subject to the MMRs, do not meet any IPP exemption criteria and do not include MMR targets as these were not established by entities in the procurement process are non-compliant with the IPP and should not be referred to or recorded as exemptions or exclusions.

4.1 Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements made three recommendations to all audited entities. All entities agreed to the recommendations. Entities closed recommendation 4 between May 2020 and December 2020; recommendation 5 between May 2020 and October 2020 (except for Infrastructure which closed the recommendation in June 2021); and recommendation 6 between May 2020 and July 2021.¹⁰⁶

4.2 The ANAO assessed entities’ implementation of each of the three recommendations based on a two-part assessment of:

• guidance — the entity had established or updated guidance (including policies, protocols and templates) or controls in line with agreed actions; and
• contract compliance — MMR contracts held by the entity were compliant with the MMRs in line with the intent of each recommendation.

An entity was assessed as having fully implemented a recommendation if guidance was fully established and MMR contracts were fully compliant. The ANAO assessment is summarised in Table 4.1 (recommendation 4), Table 4.2 (recommendation 5), and Table 4.3 (recommendation 6).¹⁰⁷

Table 4.1: Assessment of entities’ implementation of recommendation 4 — All audited entities review and update their procurement protocols to ensure procuring officers undertaking major procurements that trigger the MMRs comply with required steps in the procurement process

Key: ● Fully established/compliant ◕ Largely established/compliant  ◑ Partly established/compliant ◔ Largely not established/compliant ◯ Not established/compliant.

Source: ANAO analysis of entity documentation.

Table 4.2: Assessment of entities’ implementation of recommendation 5 — All audited entities establish processes, or update existing processes, to ensure contract managers and contractors regularly use the Indigenous Procurement Policy Reporting Solution (IPPRS) for MMR reporting

Key: ● Fully established/compliant ◕ Largely established/compliant  ◑ Partly established/compliant ◔ Largely not established/compliant ◯ Not established/compliant.

Source: ANAO analysis of entity documentation.

Table 4.3: Assessment of entities’ implementation of recommendation 6 — After guidance has been provided by the policy owner, all audited entities establish appropriate controls and risk-based assurance activities for active MMR contracts

Key: ● Fully established/compliant ◕ Largely established/compliant  ◑ Partly established/compliant ◔ Largely not established/compliant ◯ Not established/compliant.

Source: ANAO analysis of entity documentation.

Were procurement protocols updated to ensure compliance?

4.3 The Indigenous Procurement Policy (IPP) establishes requirements for procurements that meet the MMR criteria (see Figure 1.1). Entities should have appropriate guidance to embed compliance with MMR requirements within procurement practices. For entities that undertake major procurements infrequently, guidance is important to address the risks associated with undertaking an unfamiliar compliance process.¹⁰⁸

Note a: The IPP has specific obligations for all contracts subject to the MMRs. To give effect to these obligations, the NIAA publishes ‘model clauses’ for inclusion in approaches to market and contracts, which entities may use (see paragraph 2.10).

Note b: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, paras. 4.4–4.7.

Note c: ibid., paras. 4.9–4.15.

Note d: ibid., para. 4.19–4.22.

Procurement protocols and guidance on mandatory minimum requirements

4.4 All entities undertook activities to improve officials’ understanding of MMR requirements, including the following.

• Development of procurement training — In August 2015 and January 2025 respectively, Defence and Infrastructure developed specific IPP / MMR training that is available to staff on request. The four other entities included a brief overview of the IPP and MMR in general procurement training. In March 2022, Education also released ‘Supporting Indigenous Businesses’ training that staff were required to complete in the 12 months prior to submitting a procurement plan.
• Update of procurement systems — All entities included mandatory prompts in procurement systems to identify whether the MMRs apply to the proposed procurement.
• Inclusion of model clauses in templates — All entities except the NIAA included NIAA’s model contract clauses in tender and contract templates by default (that is, which need to be excluded if they are not required). The NIAA’s templates default to exclude the MMR model clauses. NIAA procurement officials and contract managers need to access a copy of the model clauses and insert them into the approach to market documentation or contract if required.
• Development of detailed guidance — All entities had some internal guidance that addresses the MMRs. Examples of detailed guidance for procurement and contract management staff included: a Defence checklist for evaluating a tenderer’s Indigenous Participation Plan; and an Infrastructure procurement guide that covers the applicability of the MMRs for procurements involving a standing offer or panel arrangement. Home Affairs’ Contract Management Manual outlines roles and responsibilities for each stage of the procurement process, including identifying who is responsible for determining if the MMRs apply to the procurement.

4.5 The ANAO examined entities’ internal guidance to determine if it identified MMR requirements throughout the procurement lifecycle, up to and including the contract management phase (see Table 4.4). The final two phases, reporting and finalisation, are discussed from paragraph 4.22.

Table 4.4: Assessment of entity internal guidance on mandatory minimum requirements (approach to market to contract management phases), as at December 2024

Key: ◆ Requirements identified ▲ Requirements partly identified ■ Requirements not identified.

Note a: Has the guidance been updated since the 2019–20 audit? Does the guidance clearly identify when procurement triggers the MMR requirement? Does it clearly identify who is responsible for determining if a procurement activity triggers the MMR requirement? Does it refer to the model contract clauses? Does it include information on voluntary MMR targets for varied contracts?

Note b: Education updated out-of-date guidance that listed eight MMR applicable industry categories instead of 19 categories in January 2025.

Note c: Does the guidance specify that any invitation to potential suppliers must specify if a component will need to be delivered in remote areas? Does it specify that the tenderer needs to declare their level of compliance with any past contracts that included MMRs? Does it specify that the tenderer will need to develop an Indigenous Participation Plan?

Note d: Does the guidance specify checking past compliance with MMR requirements? Does it specify ensuring that the Indigenous Participation Plan includes plans to increase Indigenous participation? Does it specify that where required the tenderer’s application should outline the capability to achieve significant Indigenous participation in remote areas?

Note e: Does the guidance clearly identify that the contract manager is responsible for ensuring compliance with the MMR targets and Indigenous Participation Plan? Does it clearly specify that the contract manager will need to establish, monitor and assess progress reports? Does it specify that reporting needs to be done through the IPP reporting system? Does it specify that the contract manager needs to undertake assurance activities to ensure accurate information is being reported? Does it outline that variations of MMR targets during the contract term may require a revised Indigenous Participation Plan?

Source: ANAO analysis of entity documentation.

4.6 Defence, Education, Home Affairs and Infrastructure’s guidance identified all key MMR requirements across the lifecycle to the contract management phase. DEWR’s guidance identified some requirements and the NIAA’s internal guidance was incomplete.

• NIAA — The NIAA had two methods to identify procurements that could trigger the MMRs: a request for tender template states that for high value procurements, the IPP ‘imposes specific obligations … [and staff] must contact the Procurement and Contracting Section … for specific clauses that will need to be inserted into [the] request for tender’; and a prompt in its procurement system to identify procurements greater than $7.5 million. Except for the above, the NIAA provided no operational guidance for procurement officers and contract managers on the requirements of the MMRs throughout the procurement lifecycle.¹⁰⁹
• DEWR — DEWR’s intranet provided out of date information on the MMRs, including incorrectly stating there are eight applicable industry categories instead of 19. DEWR’s contract management guidance did not identify the specific responsibilities of the contract manager to undertake assurance activities or outline arrangements for contract variations.

4.10 Under the IPP, entities are required to apply the MMRs when establishing and procuring from a panel arrangement when the MMR criteria are met (see Figure 1.1). In July 2023, the NIAA reported to the Chief Operating Officers (COO) Committee (see paragraph 2.20) that six contracts had been identified that did not have MMR clauses, including some contracts from panel arrangements. The committee agreed to the NIAA’s request for portfolio agencies to review their panel arrangements to ensure the clauses are included. Except for the NIAA and DEWR, entities have guidance identifying that the MMRs may apply when procuring from a panel. Of the other four entities, Education and Home Affairs have further guidance identifying that MMR clauses need to be included at the approach to market and in the subsequent deed of standing offer when establishing a panel.¹¹⁰

4.12 As outlined in paragraph 4.21, contract managers are required to complete in the IPPRS an overall compliance assessment for a contractor at the end of the contract. At the tender evaluation stage for a new contract, all entities except the NIAA required tenderers to provide information on past compliance with the MMRs.¹¹¹ While not a requirement under the IPP, the NIAA’s external guidance for procuring officials states that entities should search the IPPRS for tenderer’s past performance information. As this is not a specified requirement under the IPP, this was not tested in the internal guidance assessment. However, it was observed that, aside from Education’s, which was updated in January 2025¹¹², none of the entities’ internal guidance advised procurement staff to request a search of the IPPRS to inform tender evaluations.¹¹³ Of the 43 contracts examined by the ANAO for which the assessment of the Indigenous Participation Plan was documented (see Table 4.5), none of the assessments included searching the IPPRS for contractors’ previous MMR compliance.

Implementation of mandatory minimum requirements

4.14 The ANAO examined 84 contracts subject to the MMRs (see paragraph 1.27 and Appendix 5) to determine whether entities had complied with the required steps in the approach to market to contract management phases of the procurement lifecycle (see Table 4.5). Of the 12 Home Affairs’ contracts examined, one contract met all relevant requirements. For eight contracts, Home Affairs did not identify that the MMRs applied until after the contract was executed and subsequently negotiated with the contractors to establish MMR targets. Each entity could improve its compliance with MMR requirements at the tender evaluation phase.

Table 4.5: Contract compliance with mandatory minimum requirements (approach to market to contract management phases)

Key: ■ 100 per cent compliant ■ 80 to 99 per cent compliant ■ 60 to 79 per cent compliant ■ 40 to 59 per cent compliant ■ Zero to 39 per cent compliant.

Note a: Of the 26 contracts examined, five commenced before DEWR was established on 1 July 2022, 20 commenced on 1 July 2022, and one commenced after 1 July 2022 (see Table A.5).

Note b: Of the 33 contracts assessed, one contract awarded through a panel procurement undertook an approach to market in 2019 and was not subject to the MMRs at the time and was therefore excluded from the approach to market analysis.

Note c: For 15 contracts, the MMR targets and Indigenous Participation Plan were established after the contract was executed. For the contract management assessment, if the target and plan were established more than three months after the contract commenced, then the ANAO has assessed that these contracts did not have a target or a plan. Of the 15 contracts, this was the case for six contracts (two for Defence, one for Education, one for DEWR and two for Home Affairs).

Note d: The IPP sets minimum values for contract-based MMR targets (four per cent, or greater than four per cent for contracts with a component to be delivered in remote area/s) and organisation-based MMR targets (three per cent) (see paragraphs 1.4 to 1.5). The ANAO assessed whether the contracted target met the minimum values.

Source: ANAO analysis of entity documentation.

4.17 Ten of the 33 Defence contracts examined, ten of the 26 DEWR contracts examined, and six of the 12 Home Affairs contracts examined were awarded from panel arrangements. While Defence’s non-panel procurements mostly complied with the MMR requirements at the approach to market, tender evaluation and contract management phases, its panel procurements were partly compliant, especially in the approach to market and tender evaluation phases (see Table 4.6). For DEWR and Home Affairs, there was no difference between panel and non-panel procurements.

Table 4.6: Defence contract compliance with mandatory minimum requirements (approach to market to contract management phases) — panel and non-panel procurements

Key: ■ 100 per cent compliant  ■ 80 to 99 per cent compliant  ■ 60 to 79 per cent compliant ■ 40 to 59 per cent compliant ■ Zero to 39 per cent compliant

Note a: Of the 33 contracts assessed, one contract awarded through a panel procurement undertook an approach to market in 2019 and was not subject to the MMRs at the time and was therefore excluded from the approach to market analysis.

Source: ANAO analysis of Defence documentation.

Did entities establish reporting processes to ensure regular reporting?

4.19 Under the IPP, contractors are required to report on their progress against agreed MMR targets on a quarterly basis in the IPPRS.¹¹⁴ There are four steps of the reporting and finalisation phases requiring entering or viewing data in the IPPRS: set up, reporting, finalisation and finished (see Figure 4.1).

Figure 4.1: Reporting steps in the Indigenous Procurement Policy Reporting Solution

Note a: The due date for the first quarterly performance report defaults to three months after the contract start date. The NIAA’s guidance states that entities can adjust this date to align with other business reporting periods, such as a standard financial quarter. The maximum number of days to submit reports is 60.

Source: ANAO representation of NIAA, MMR contract management process flow, n.d., available from https://www.niaa.gov.au/online-help-ipprs/contract-based-assessment/mmr-contract-management-process-flow.

4.20 Entities must complete the set-up step to enable contractors to submit quarterly reports.¹¹⁵ Entities are required to manually enter MMR targets, the due date for the first quarterly performance report, and whether the contract is a remote-area contract in the IPPRS. Other details including contract end dates and contract values are to be automatically updated in the IPPRS based on information published on AusTender. The IPPRS automatically calculates due dates for subsequent quarterly reports until the contract end date. For contracts with contract-based MMR targets, the IPPRS automatically calculates the monetary value of the Indigenous contractor-use target based on the MMR target and the contract value.

4.21 During the reporting phase, entity contract managers are responsible for monitoring the contractors’ progress and ensuring compliance with the Indigenous Participation Plan and MMR targets. The contract manager is also responsible for verifying that information reported by the contractor is accurate.¹¹⁶ At the end of the contract term, entities must complete a final assessment of contractors’ performance against MMR targets. This allows other entities to view the assessment to inform a future tender evaluation process (see paragraph 4.12).¹¹⁷ The IPPRS sends automatic emails to entities and contractors when reporting steps are required or overdue (see paragraph 2.26).

Note a: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, paras. 4.32–4.33.

Note b: ibid., paras. 4.36–4.40.

Guidance on reporting

4.22 The ANAO examined the entities’ internal guidance to determine if it supported reporting in the IPPRS at the reporting and finalisation stages of the procurement lifecycle (see Table 4.7).

Table 4.7: Assessment of entity internal guidance on mandatory minimum requirements (reporting and finalisation phases), as at December 2024

Key: ◆ Requirements identified ▲ Requirements partly identified ■ Requirements not identified.

Note a: Does the guidance specify that suppliers need to report on Indigenous Participation Plan progress each quarter? Does it specify that supplier reporting will need to include relevant employment targets and/or supply chain targets? Does it outline the assurance activities that the contract manager needs to undertake? Does it outline timeframes for reporting?

Note b: Does the guidance specify that the entity contract manager needs to provide an assessment of the contractor’s performance in IPPRS?

Source: ANAO analysis of entity documentation.

4.23 As at December 2024, Defence, Education and Home Affairs’ guidance identified MMR reporting requirements during the reporting and finalisation phases. Infrastructure’s guidance was incomplete. The NIAA and DEWR had limited guidance on MMR reporting and finalisation requirements.

• NIAA — The NIAA had no operational guidance for contract managers to ensure compliance with MMR reporting requirements. The Department of the Prime Minister and Cabinet’s Contract Management Guide was available on the NIAA intranet. The guide suggested developing an MMR plan to identify how MMR targets would be monitored and mentioned MMR performance reporting and final assessment. It did not describe the responsibilities of the contract manager.
• DEWR — DEWR’s intranet had information and limited guidance on the contract manager’s role in relation to reporting, assurance activities and the final assessment, some of which was out of date. DEWR’s Indigenous Procurement Strategy required contract managers to contact the central procurement area for advice on MMR reporting requirements.
• Infrastructure —Infrastructure’s guidance did not identify assurance activities or detail the information contractors are required to report (for example, the total full time equivalent workforce and Indigenous workforce working on the contract).¹¹⁸ Infrastructure released optional IPP training in January 2025 (see paragraph 4.4) which provides information on assurance activities and details on reporting requirements.

Reporting compliance

4.28 As at May 2024, 69 per cent of contracts administered by the six entities were at the reporting phase (Appendix 5).¹¹⁹ The ANAO examined 84 contracts subject to the MMRs (see paragraph 1.27) to determine whether entities had complied with the required steps in the reporting and finalisation phases of the procurement lifecycle in a timely and accurate manner.

Timeliness

4.29 The IPP does not establish timeframes for MMR reporting (see paragraph 2.21). In the absence of established timeframes, the ANAO examined 84 MMR contracts to determine whether entities:

• set up contracts within three months of the contract start date (to enable the contractor to submit the first quarterly report on time);
• followed up with contractors on performance reports not submitted within 60 days of the due date¹²⁰; and
• finalised the final performance assessment within 180 days of the contract end date.¹²¹

4.30 Of the 84 contracts examined:

• 40 contracts (48 per cent) were set up within three months of the contract start date;
• 38 contracts (45 per cent) were set up for reporting more than three months after the contract start date; and
• six (seven per cent) were not set up for reporting at all.

4.31 Of the 78 contracts set up for reporting:

• 50 (64 per cent) had a quarterly report submitted within 60 days of the due date for the most recent quarterly report;
• 27 (35 per cent) did not have the most recent quarterly report submitted within 60 days of the due date¹²²; and
• one was missing its reporting record in the IPPRS and was excluded from the analysis.

4.32 Of 15 finalised contracts:

• nine (60 per cent) had the final performance assessment finalised within 180 days of the contract end date; and
• six (40 per cent) did not have a final performance assessment completed within 180 days of the contract end date (see Table 4.8).

4.33 The NIAA set up contracts in a timely manner. As contractors provided their most recent quarterly report on time in the sample of contracts examined, there was no need for the NIAA to follow up on late reporting. There were no NIAA contracts in the sample that required finalisation in the IPPRS. All other entities were not timely in at least one of the set-up, reporting or finalisation steps and did not consistently follow up with contractors on late reporting.¹²³

Table 4.8: Timeliness of mandatory minimum requirements reporting, as at October 2024^a

Key: ■ 100 per cent per cent within timeframe/followed up ■ 80 to 99 per cent within timeframe/followed up ■ 60 to 79 per cent within timeframe/followed up ■ 40 to 59 per cent within timeframe/followed up ■ Zero to 39 per cent within timeframe/followed up.

Note a: For DEWR, the ANAO completed the IPPRS contract analysis in November 2024.

Note b: Of the 26 contracts examined, five commenced before DEWR was established on 1 July 2022, 20 commenced on 1 July 2022, and one commenced after 1 July 2022 (see Table A.5).

Note c: An additional one contract was set up for reporting but was missing its IPPRS reporting record. This contract was excluded from the analysis.

Source: ANAO analysis of entity documentation and IPPRS records.

Accuracy

4.34 Details of MMR contracts should be accurately recorded in the IPPRS to ensure contractors are reporting and assessed against their contractual obligations. The ANAO examined IPPRS records for 84 MMR contracts to determine whether MMR targets as recorded in the IPPRS were consistent with the contracted target; and remote-area contracts were correctly identified (see Table 4.9).

Table 4.9: Mandatory minimum requirements target accuracy, as at October 2024^a

Key: ■ 100 per cent per cent accurate ■ 80 to 99 per cent accurate ■ 60 to 79 per cent accurate  ■ 40 to 59 per cent accurate ■ Zero to 39 per cent accurate.

Note a: For DEWR, the ANAO completed the IPPRS contract analysis in November 2024.

Note b: For six contracts, the MMR target or Indigenous Participation Plan was established more than three months after the contract commenced (see Table 4.5). These contracts were included in the assessment of IPPRS accuracy, as were two additional contracts for which the MMR target was agreed in an email between the contract manager and the contractor.

Note c: MMR contracts delivered in a remote area have an additional requirement to deliver significant Indigenous outcomes in that area and may require higher MMR targets than non-remote contracts (see paragraph 1.5).

Source: ANAO analysis of entity documentation and IPPRS records.

4.35 MMR targets for contracts held by the NIAA, Defence and Education were accurately recorded in the IPPRS. MMR targets for six DEWR contracts, four Home Affairs contracts and four Infrastructure contracts did not match the contracted value.¹²⁴ Remote-area contracts held by all entities other than the NIAA were inconsistently identified.

4.36 Guidance for Australian Government contract managers published by the NIAA as the policy owner states that the IPPRS will update the Indigenous contractor-use component of the MMR target and reporting dates to reflect contract variations on the day after they are published on AusTender.¹²⁵ The ANAO identified eight of 84 contracts for which the contract end date and/or contract value in the IPPRS was inconsistent with AusTender (three had different end dates; five had different values).¹²⁶ Of the five contracts with inconsistent contract values, three contracts had contract-based MMR targets, which had not been updated to reflect the varied contract value (in all cases, higher). For one contract, updating the contract value in the IPPRS would result in the contract being assessed as at risk of not meeting the MMR target instead of being on track.

Were controls and risk-based assurance activities established?

4.38 The IPP states that the entity contract manager is responsible for ensuring compliance with contractors’ Indigenous Participation Plans and MMR targets. The entity contract manager is responsible for undertaking appropriate assurance activities to ensure reported information is accurate.¹²⁷

Note a: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements, paras. 4.43–4.44.

Note b: ibid., para. 4.45.

Note c: ibid., paras. 4.48–4.51.

Guidance provided by the policy owner

4.39 In July 2020, the NIAA published MMR guidance for contract managers that included sections on monitoring contractors’ progress against MMR targets and verifying reported MMR performance information (see paragraph 2.10).¹²⁸ The guidance states that contract managers should review all reported MMR performance information and follow up with contractors if MMR targets are not being met.¹²⁹ The guidance has a short outline on how MMR performance information can be verified by contractors and contract managers:

The contract manager should specify the documentation the supplier must maintain as evidence of MMR performance, taking into consideration associated risks. From time to time the contract manager should take steps to assure themselves that information being reported by suppliers is accurate. This could, for example, include spot reviews of evidence to support the reported information, or site visits as appropriate. Subject to privacy requirements, the documents associated with the MMR workforce target could include: payroll information that demonstrate hours worked by staff on the project; [and] evidence that staff have identified as Aboriginal and/or Torres Strait Islander as part of a human resource processes where providing false information could risk their employment.¹³⁰

4.40 In June 2024, the NIAA circulated additional guidance to the COO Committee on verifying reported performance information (see paragraph 2.20).

4.41 The IPPRS has functions to support the identification of compliance risks, including:

• notifying entities when a possible MMR contract is required to be set up to enable performance reporting;
• notifying contract managers when a contractor’s quarterly performance report indicates achievement of the MMR target is at risk; and
• checking whether suppliers included in a contractor’s supply-use target reporting are listed with Supply Nation and the Office of Registrar of Indigenous Corporations.

4.42 In January and February 2025, Defence, Education and Infrastructure advised the ANAO that they would welcome further guidance from the NIAA on assurance activities for MMR performance reporting. Education noted it would especially like guidance from the NIAA on obtaining evidence on confirming Indigenous heritage in a sensitive manner. Defence advised the ANAO:

NIAA should be responsible for establishing validation and verification processes in their guidance for procuring officials and contract managers and enabling the recording of verification/validation in the IPP Reporting Solution to enable consistent application across the Commonwealth.

4.43 In April 2025, NIAA advised the ANAO that:

The NIAA is happy to provide guidance to non-corporate Commonwealth entities on the implementation of MMRs, and to consider potential enhancements to IPPRS as described, within available resources.

4.44 While the policy owner has an important role to play in promoting compliance with a procurement-connected policy, implementing entities are accountable for their own compliance and can also play an active role. Under the Australian Public Service (APS) value of stewardship, all APS employees are stewards. In its guidance on stewardship the Australian Public Service Commission states:

we show this when we strive to do a good job, find ways to do things better, and work together to deliver the best outcomes we can. We are custodians of public service craft, knowledge, and practice—and we show this when we learn from the experience of those who have come before us, and make our own contributions to public service know-how for the future. The inclusion of Stewardship as an APS Value reflects behaviours and practices that we see across the APS every day—from agencies working together to respond to crises or emerging policy issues, to teams providing future-focused and considered advice to government, to individuals maintaining accurate records and representing their agency and the APS with integrity. Enshrining Stewardship as a Value requires us to be deliberate, active, and reflective in considering the context and purpose of our work, so that each of us can contribute to the continuous improvement of the APS as a professional and trusted public service.¹³¹

4.45 Practice-sharing across entities can support Australian Government entities to meet requirements and improve practice. Entities that undertake procurement less frequently may be able to learn from those that undertake procurement more frequently. Communities of practice, such as the Commonwealth Procurement and Contract Management Community of Practice, have been set up to share best practice, raise related issues, seek guidance and hear from experts.¹³² In March 2019, the Department of Finance established the Centre of Procurement Excellence, which aims in part to build public sector capability in procurement and encourage innovation in procurement.¹³³

Entities’ assurance controls and arrangements

4.47 The ANAO examined whether entities had developed controls and arrangements to support gaining assurance over contractor MMR performance reporting (Table 4.10).

Table 4.10: Entities’ mandatory minimum requirements assurance controls and arrangements

Note a: Home Affairs has undertaken four internal assurance reviews of MMR contracts, which were completed in April 2021, September 2022, October 2023 and September 2024 (see paragraph 4.51).

Source: ANAO analysis of entity documentation.

Entities’ assurance activities

4.48 Of the 84 contracts examined by the ANAO, the IPPRS assigned a status¹³⁴ as follows:

• 35 (42 per cent) were on track to meet their MMR targets;
• 28 (33 per cent) were not on track to meet their MMR targets;
• 15 (18 per cent) had an ‘unable to determine’ status^135; and
• six (seven per cent) had no status as the contracts had not been set up for reporting in the IPPRS.

4.49 The ANAO examined:

• the 28 contracts that had a ‘not on track’ IPPRS status to determine whether entities followed up with contractors; and
• a subset of 21 of the 84 contracts (sampled randomly and independent of the IPPRS status)¹³⁶ to determine whether entities had undertaken activities to verify the accuracy of the contractor’s reported MMR performance information (see Table 4.11).

Table 4.11: Entity assurance of mandatory minimum requirements performance reporting

Key: ■ 100 per cent per cent compliant ■ 80 to 99 per cent ■ 60 to 79 per cent ■ 40 to 59 per cent ■ Zero to 39 per cent.

Note a: For the one contract examined, the NIAA required the contractor to verify when a supplier identifies as Indigenous but did not request evidence to confirm whether this was done or request other information to verify the accuracy of the contractor’s MMR reporting.

Source: ANAO analysis of entity documentation and IPPRS records.

4.50 None of the relevant entities followed up on all MMR contracts identified as at risk of not meeting MMR targets. Other than Defence, entities did not verify reported MMR performance information for most or all contracts.

4.51 Home Affairs has undertaken four annual internal assurance reviews since 2021, which have included surveying contract managers to identify activities they had undertaken to verify reported MMR performance information. A 2024 internal review found one of six contract managers reported undertaking activities to verify reporting.

4.52 For the contracts examined by the ANAO, where activities were undertaken to verify reported MMR performance information, approaches included:

• requiring contractors to submit a formal statement (attestation) that the reported information was accurate;
• confirming contractor registration/certification with Supply Nation;
• confirming subcontractor registration with Supply Nation and evidence of payment to the subcontractor; and
• confirming the Aboriginal and/or Torres Strait Islander heritage of contractor key staff by citing a letter from an Aboriginal community and doing a spot-check against submitted timesheets.

Appendix 1 Entity responses

National Indigenous Australians Agency

Department of Defence

Department of Education

Department of Employment and Workplace Relations

Department of Home Affairs

Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s corporate plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit. It is not clear whether these actions and/or the timing of these actions were planned in response to proposed or actual audit activity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

• In November 2023, the National Indigenous Australians Agency (NIAA) surveyed Australian Government entities on their satisfaction with the NIAA’s support for the Indigenous Procurement Policy (IPP) (see Box 3).
• In July 2024, the NIAA provided advice to Australian Government entities to assist them with improving their processes to verify reported mandatory minimum requirements (MMRs) performance information (see paragraph 2.20).
• In August 2024, the NIAA updated its Indigenous procurement intranet page to provide an overview of the MMRs and provide a hyperlink to the MMR factsheet available on the NIAA website (see paragraph 4.6).
• In September 2024, the Department of Education released a new contract management suite and annual contractor compliance statement (see Table 4.10).
• In January 2025, the Department of Education updated its service contract template and intranet page from the eight MMR applicable industry categories to the current 19 categories (see Table 4.4).
• In January 2025, the Department of Education updated its guidance to identify that MMR clauses need to be included at the approach to market and in the subsequent deed of standing offer when establishing a panel (see paragraph 4.10).
• In January 2025, the Department of Education updated its tender evaluation guidance to state that staff must consider a tenderer’s compliance with previous MMR contracts by a search of the IPPRS (see paragraph 4.12).
• In January 2025, the NIAA provided advice to the government on extending the IPP as a procurement-connected policy (see paragraph 2.44).
• In January 2025, Infrastructure released voluntary IPP training (see paragraphs 4.4 and 4.23 and Table 4.10).
• In February 2025, the Australian Government announced that the NIAA would explore the feasibility of increasing transparency of suppliers’ performance against MMR targets (see paragraph 1.18).

Appendix 3 Mandatory minimum requirements industry coverage

1. Between 1 July 2015 and 30 June 2020, under the Indigenous Procurement Policy, the mandatory minimum requirements (MMRs) applied to procurements in eight industry categories. From 1 July 2020, the MMRs applied to procurements in an additional 11 industry categories with some sub-category exemptions. Table A.1 lists the MMR industry categories and sub-category exemptions.

Table A.1: Mandatory minimum requirements industry coverage

Note a: The United Nations Standard Products and Services Code (UNSPSC) is a classification system used for reporting Australian Government procurement activity.

Note b: There are three sub-category exemptions: 80131500 – Lease and rental of property or building; 80131501 – Land lease; and 80131503 – Residential rental.

Note c: There are two sub-category exemptions: 84130000 – Insurance and retirement services; and 84131800 – Retirement funds.

Note d: There are two sub-category exemptions: 9211000 – Military services and national defence; and 92111700 – Military science and research.

Source: National Indigenous Australians Agency, Indigenous Procurement Policy, NIAA, Canberra, 2020.

Appendix 4 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements audit recommendations

Source: Auditor-General Report No. 25 2019–20, Aboriginal and Torres Strait Islander Participation Targets in Major Procurements.

Appendix 5 Contract sampling for mandatory minimum requirements compliance testing

1. The audit undertook mandatory minimum requirements (MMR) compliance testing on a sample of contracts from the six audited entities — the National Indigenous Australians Agency (NIAA); Department of Defence (Defence); Department of Education (Education); Department of Employment and Workplace Relations (DEWR); Department of Home Affairs (Home Affairs); and Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (Infrastructure).

Contract population

2. The universe of contracts was identified from a data extract from the Indigenous Procurement Policy Reporting Solution (IPPRS) drawn on 1 May 2024. The data extract included all reported contracts subject to the MMRs since the inception of the IPP, including finalised contracts.

3. The universe of each entities’ MMR contracts was identified based on ‘agency’ field in the data extract.

4. For the six entities included in the audit, the universe of MMR contracts ranged from five for NIAA to 273 for Defence (Table A.2).

Table A.2. Status of entities’ mandatory minimum requirements contracts (as at 1 May 2024)

Source: ANAO analysis of IPPRS data.

5. In a second step to identify the population of contracts relevant to the audit, filters were applied to the data extract. These comprised:

• contract did not have an MMR exemption;
• contract start date was between 1 July 2020 and 31 December 2023; and
• contract type was ‘standard MMR’.¹³⁷
• The application of these filters resulted in a population of 346 contracts across the six audited entities (see Table A.3).

Table A.3. Status of mandatory minimum requirements contracts in population identified for sampling (as at 1 May 2024)

Source: ANAO analysis of IPPRS data.

Contract sampling

6. Two sampling approaches were used as follows.

• Census testing was undertaken for the NIAA, Education, Home Affairs, and Infrastructure, where the population contained 15 contracts or fewer for each entity.
• Randomised sampling was undertaken for Defence and DEWR, where the population contained 130 or more contracts for each entity. A random sample of 35 and 26 contracts was drawn for Defence and DEWR respectively.

7. This resulted in a total sample of 91 contracts (see Table A.4 and Table A.5). After the audit commenced, seven contracts were made exempt from the MMRs by the entity, or were reallocated to another entity. The seven exempted contracts were excluded from analysis.

Table A.4. Status of mandatory minimum requirements contracts in the ANAO’s compliance testing sample (as at 1 May 2024)

Source: ANAO analysis of IPPRS data.

Table A.5. Mandatory minimum requirements contracts included in the ANAO’s compliance testing sample

Note a: Contracts made MMR exempt or reallocated to another entity after the audit commenced.

Source: IPPRS and AusTender.

Appendix 6 Portfolio mandatory minimum requirements reporting compliance

1. Table A.6 provides the mandatory minimum requirements (MMR) reporting compliance information reported by the National Indigenous Australians Agency (NIAA) to the Chief Operating Officers (COO) Committee in June 2024 (see paragraph 2.28).

2. Information reported by the NIAA was based on compliance reports provided by each Australian Government portfolio for the period July 2023 to May 2024. Portfolio departments were required to report the number of MMR contracts:

• not set up by the relevant entity to enable the contractor to submit quarterly performance reports against agreed MMR targets in the Indigenous Procurement Policy Reporting Solution (IPPRS);
• in the reporting phase; and
• in the reporting phase and compliant with reporting requirements.¹³⁸

Table A.6: Mandatory minimum requirements reporting compliance (July 2023 to May 2024), as reported to Chief Operating Officers Committee in June 2024

Note a: Entities are required to set up contracts in the IPPRS to enable contractors to commence submitting quarterly performance reports against agreed MMR targets. This includes entering contract details for the contractor and specifying the Indigenous employment and contractor-use components of the MMR target.

Note b: In requesting compliance reports from entities, the NIAA defined compliance with reporting requirements as ‘reporting to date’.

Note c: An ANAO contract is non-compliant with the mandatory minimum requirements.

Source: NIAA documentation.