Aboriginal Procurement Policy

January 2021

Treasury

Contents

Introduction 01

The APP applies to the procurement of goods, services and construction by all NSW Government agencies 02

Applying the APP — NSW Government agencies 03

Applying the APP — Government suppliers 05

Target: 1 per cent addressable spend 06

Target: 3 per cent goods and services contracts 07

Target: 3,000 Aboriginal FTE employment opportunities 08

Governance 09

Review of the APP 09

Further information 10

01

Introduction

The NSW Government values the

economic, social and cultural contribution

of the Aboriginal and Torres Strait

Islander peoples of NSW.

TheAboriginalProcurementPolicy(APP)

willcontributetotheNSWGovernment’s

strategiceconomicpolicyofGrowing

NSW’sFirstEconomy.Government

procurementprovidesasignificant

opportunitytoincreaseskillsand

economicparticipationwithinthe

State’sAboriginalandTorresStrait

Islandercommunities.

TheAPPsupportstheNSWGovernment

PlanforAboriginalAffairs,OCHRE,and

isakeydeliverableundertheAboriginal

EconomicDevelopmentframework.

Objectives

> Supportemployment

opportunitiesforAboriginaland

TorresStraitIslanderpeoples

> Supportsustainablegrowth

ofAboriginalbusinessesby

drivingdemandviaGovernment

procurementofgoods,services

andconstruction.

Targets by 31 December 2021

> 1percentoftotaladdressable

spend:TheAPPaimsforNSW

Governmentclusterstodirect

onepercentofthecluster’s

addressablespendtoAboriginal

businesses

> 3percentoftotalgoodsand

servicescontracts:TheAPPaims

forNSWGovernmentclusters

toawardthreepercentofthe

totalnumberofgoodsand

servicescontractstoAboriginal

businesses

> 3,000full-timeequivalent

employment(FTE)opportunities

supported:TheAPPaims

tosupportanestimated

3,000FTEopportunitiesfor

AboriginalandTorresStrait

IslanderpeoplesthroughNSW

Governmentprocurement

activities.

02

The APP applies to the procurement of goods, services and construction by all NSW Government agencies

TheAPPappliestotheprocurement

ofallgoodsandservices,including

construction,byagovernmentagency,

withinthemeaningofsection162ofthe

PublicWorksandProcurementAct1912

(theAct)(collectivelyreferredto

as‘clusters’or‘agencies’inthispolicy).

State-OwnedCorporations,theParliament

ofNSWandlocalcouncilsarenotcovered

bythispolicy.State-OwnedCorporations

areencouragedtoadoptaspectsof

theAPPthatareconsistentwiththeir

corporateintent.

Commencement

NSWGovernmentagenciesmustapply

theAPPtoallrelevantprocurement

activitiesfrom1January2021.Allagencies

areencouragedtoapplythepolicyatan

earlierdate,wherepractical.

Identifying an Aboriginal business

Forthepurposeofthispolicy,an

Aboriginalbusinessisonethathasatleast

50percentAboriginalownershipand

thatisrecognisedthroughanappropriate

organisation,suchasSupplyNationorthe

NSWIndigenousChamberofCommerce

(NSWICC).Theseorganisationsmaintain

listsofAboriginalbusinessesthatare

auditedandundergoqualityassurance.

Confirming the Indigenous heritage of employees

Forthepurposeofthispolicy,suppliers

reportingonnumbersofFTEemployment

opportunitiesforAboriginalpeopleson

thecontractmustbeabletodemonstrate

theirprocesstoconfirmAboriginalor

TorresStraitIslanderheritageinlinewith

theguidanceavailableonBuy.NSW.

Accountability and transparency

TheNSWGovernmentwillpubliclyhold

itselftoaccountforperformanceunder

thepolicy.Performanceagainstpolicy

targetswillbepublishedonBuy.NSW

fortheNSWGovernmentasawhole

andataclusterlevel.Thesuccessofthis

policywillbeassessedonthefollowing

performanceindicators:

> anincreaseinthenumberofAboriginal

businessesawardedcontractswiththe

NSWGovernment

> anincreaseindirectspendwith

Aboriginalbusinesses

> anincreaseinFTEemployment

opportunitiesforAboriginalandTorres

StraitIslanderpeopleson

NSWGovernmentcontracts.

https://buy.nsw.gov.auhttps://buy.nsw.gov.au

03

Applying the APP — NSW Government agencies

Plan

Aboriginal Participation Strategy

Agenciesmustpublishanannual

AboriginalParticipationStrategythat

describeshowtheagencywillmeetits

obligationsundertheAPP.

Thestrategyshouldidentifyandaddress

upcomingprocurementopportunitiesfor

Aboriginalparticipation,ataminimum

forprocurementsvaluedat$7.5million

orabove.Strategiesmaybewrittenat

aclusteroragencylevelandmustbe

publishedonthecluster’swebsite.

Source

Aboriginal participation in contracts valued at $7.5 million or above

Agenciesmustincludeminimum

requirementsfor1.5percentAboriginal

participationinallcontractsvaluedat

$7.5millionorabovebyrequiringoneora

combinationofthefollowing:

> atleast1.5percentofthecontract

valuetobesubcontractedto

Aboriginalbusinesses

> atleast1.5percentofthecontract’s

Australian-basedworkforce(FTE),that

directlycontributetothecontractto

beAboriginalorTorresStraitIslander

peoples1

1 Theunitofmeasurementforworkforceisthenumberof‘full-timeequivalent’workersaccordingtothedefinitionofFTErelevanttotheindustryinwhichthecontractoroperates.SuppliersmustoutlinehowtheydefineandmeasureFTEintheirAboriginalparticipationplans.

> atleast1.5percentofthecontract

valuetobeappliedtothecostof

education,trainingorcapabilitybuilding

forAboriginalstafforbusinesses

directlycontributingtothecontract.

Agenciesshouldconsiderappropriate

exclusionsfromthecontractvaluein

calculatingtheirAboriginalparticipation

requirements.Exclusionsaredetermined

byagenciesandmayincludespecialised

goodsandserviceswithverylimited

opportunitiesforAboriginalparticipation.

Theapplicationofanyexclusionisatthe

discretionoftheagency.

SubcontractswithAboriginalbusinesses

thatsupportthedeliveryofNSW

Governmentgoodsandservicescontracts

maybemanuallyreportedtoNSW

Treasuryandcounttowardthecluster’s

targetofthreepercentofgoodsand

servicescontracts.

Agenciesmust:

> Requiretendererstosubmitan

AboriginalParticipationPlanduring

theprocurementprocessthatsetsout

howthetendererplanstomeetthe

Aboriginalparticipationrequirements

> Requiretendererstodeclare,during

theprocurementprocess,whether

theyhavepreviouslyparticipated,

orarecurrentlyparticipating,ina

NSWGovernmentcontractthathad

Aboriginalparticipationrequirements

and,ifapplicable,demonstratetheir

compliancewiththerequirements.

Thepastperformanceofatenderer

shouldbeconsideredwhenassessing

Aboriginalparticipationproposals

04

> IncludethefinalAboriginal

ParticipationPlaninthecontract

requirementssetforthesuccessful

supplierorsuppliers,including

quarterlyreportingagainsttheplan

andrequirementsforanyAboriginal

participationspendbalancetobe

retainedbytheagencyordirected

backtotheagencytodistributeto

TrainingServicesNSW.

Agenciesshould,wheneverfeasible:

> provideawordlimitfortender

responses

> usePlainEnglishtomakedocuments

clearerandeasierforreadersto

understandandactupon

> applyanAboriginalparticipationnon-

priceevaluationcriterion,sothatthe

responsemayalsobeevaluatedonits

socialcommitments.

Source

Applying the APP for procurements valued below $7.5 million

Wherefeasible,NSWGovernment

agenciesshouldgivefirstconsiderationto

Aboriginalbusinessesforprocurementsup

to$250,000.

Agenciesmaynegotiatedirectlywithan

Aboriginalbusinessforallprocurements

upto$250,000,evenifthereisa

mandatedprequalificationschemeor

panelinplace.TheAboriginalbusiness

engagedbytheagencydoesnotneed

tobeamemberofaNSWGovernment

prequalificationscheme.Ifoneormore

Aboriginalbusinessesareidentified,

theagencyshouldengagewiththose

suppliersbeforeproceedingtothe

broadermarket.

Agenciesareencouragedtodiscloseall

contractswithAboriginalbusinesseseven

wherethesearebelowtheGovernment

Information(PublicAccess)Act2009

contractdisclosurethreshold.Alldisclosed

contractswillcontributetothecluster

targetsofthreepercentofgoodsand

servicescontracts.

Agenciesshould,whereverfeasible,

provideconstructivefeedbackto

unsuccessfultenderersontheirtender

responses.Thisfeedbackshouldbe

providedwithaviewtobuildingthe

capabilityofAboriginalbusinessesto

applysuccessfullyforfutureopportunities.

Manage

Agenciesmust:

> Managesuppliers’compliancewiththe

APPincludingreportinginaccordance

withtheAPPreportingrequirements

> Takereasonablestepstosupport

supplierstomeettherequirements

> Confirmclaimsmadebythesupplier

inrelationtoAboriginalparticipation

andaddressanycomplianceor

performanceissues,shouldtheyarise

> Supportandassistinauditsinline

withtheNSWProcurementBoard’s

commitmenttoundertakearandom

auditoffivepercentofcontracts

annually

> Conductafinalreviewofperformance

againsttheAboriginalParticipation

Planatthecompletionofthecontract

> Directanyremainingbalanceof

Aboriginalparticipationspendto

TrainingServicesNSWwithinthree

monthsofthecompletionofthe

contractorearlierifthesupplier

confirmstheAboriginalparticipation

targetswillnotbemet.

05

Applying the APP — Government suppliers

Suppliersmust:

> Complywiththerequirementsinthis

policyandadditionalrequirementsset

byagenciesandtheNSWProcurement

Boardinsupportofthepolicy

objectives

> Allocatetheminimum1.5percent,ora

higherpercentageasagreedwiththe

contractingagency,ofcontractvalue

toAboriginalparticipation

> SubmitanAboriginalParticipation

Planduringthetenderprocess,setting

outhowthesupplierwillmeetthe

Aboriginalparticipationrequirements

ofthecontract

> Workwiththecontractingagencyto

successfullyimplementthePlan

> Reportquarterlyonprogresstoward

thePlanintheformatandmethod

requiredbythispolicy

> Supportandcooperatewithaudits

ofAboriginalParticipationPlansand

reporting

> Provideafinalreportoncompletion

ofthecontract,includingafinal

reconciliationagainsttheAboriginal

participationrequirements.Thisreport

maybesubmittedasthesupplier’s

lastrequiredquarterlyreport,inline

withthereportingformatandmethod

requiredbythispolicy

> Whereparticipationrequirements

havenotbeenmet,theremaining

balanceistobecollectedbythe

contractingagencyanddirectedto

theaccountheldbyTrainingServices

NSW.Fundscannotbetransferred

bysuppliers.Agenciesmaychoose

toretaintheAboriginalparticipation

spendatthestartofthecontractand

allocatethisspendprogressivelyto

suppliersasprogressagainstthePlan

isdemonstrated.

Aboriginal Participation Fund

TrainingServicesNSWhasestablishedthe

AboriginalParticipationFundtoreceive

paymentswhenasupplierdoesnot

meetcontractedAboriginalparticipation

requirements.TrainingServicesNSW

willusethesefundstotargetskillsand

capacitygaps,educationandcapability-

buildingprogramsforAboriginalpeoples

andbusinessestoenableparticipation

requirementstobemetforfutureNSW

Governmentcontracts.

NSWGovernmentencouragessupplier

feedbackonanyareasoffocusto

enablefutureAboriginalparticipation

requirementstobemet.

Reporting

Suppliersarerequiredtoreportquarterly

onprogressagainsttheircommitments

intheAboriginalParticipationPlaninthe

formatandmethodrequiredbythispolicy,

andasitisupdatedfromtimetotime.

06

Target: 1 per cent addressable spend

The APP aims for clusters to direct

one per cent of addressable spend to

Aboriginal businesses by the end of

2021. In response to the 2019 policy

review recommendation to strengthen

accountability, NSW Treasury will publish

cluster targets annually and report on

cluster progress towards the targets.

What is addressable spend?

TheNSWGovernmentcategorisesits

procurementspendinaccordancewith

theUnitedNationsStandardProductsand

ServicesCode(UNSPSC).

ForthepurposesoftheAPP,NSW

Treasuryhasdefined‘addressable’spend

asacategoryofspendwherethereare

opportunitiesforagenciestoengage

Aboriginalbusinesses.Addressablespend

hasprimarilybeensetbasedoncategories

ofgoodsandservicesprovidedby

businessesregisteredwithNSWICCand

SupplyNation.

‘Non-addressable’spendisacategory

ofspendwherethereareverylimited

opportunitiesforagenciestoengage

Aboriginalbusinesses.Itincludes

categorieswheretherearenorecognised

Aboriginalbusinessesabletosupplyto

government,spendsubjecttomandated

whole-of-governmentcontracts,foster

carepaymentsorjurycosts,spend

onutilities,grants,andspendtoother

governmententities,State-Owned

Corporations,orStatutoryAuthorities.

Auniformlistofaddressablespend

categorieshasbeenestablished.

Performanceinspendcategoriesand

changesinopportunitiesacrossthe

categorieswillbereviewedannually.

Calculating the addressable spend target

Theaddressablespendforeachcluster

istheaverageofacluster’stotalspend

intheaddressablespendcategoriesover

threepreviousfinancialyears.Theoneper

centaddressablespendtargetisoneper

centofthecluster’saddressablespend.

Clusteraddressablespend(CAS)

Addressablespend(AS)

CAS=Theaverageofthecluster’s

totalspendinaddressablespend

categoriesoverthethreeprevious

financialyears.

CAS = (ASY1 + ASY2 + ASY3)/3

Clusteraddressablespendtarget

(CAST)

CAST = 0.01 x CAS

Y1, Y2, Y3 = Financial year 1, 2 and 3

How is cluster progress toward the spend target to be reported?

TheAustralianBusinessNumbers(ABNs)

ofverifiedAboriginalbusinessesare

matchedagainstNSWGovernment

procurementspenddata.Workis

underwaytocapturespendwith

Aboriginalbusinessesonpurchasing

cards(P-cards).Intheinterim,clusters

maymanuallyreportP-cardspendwith

AboriginalbusinessestoNSWTreasury.

07

Target: 3 per cent goods and services contracts

The APP aims for Aboriginal businesses

to be awarded at least three per cent of

the total number of NSW Government

contracts for goods and services by

the end of 2021. In response to the

2019 policy review recommendation

to strengthen accountability, the

targets are set by cluster. The target

excludes construction contracts and

non-procurement contracts. NSW

Treasury will publish cluster targets

annually and report on cluster progress

towards the targets.

Calculating the contracts target

Targetsarecalculatedannuallybased

onthreepercentoftheaveragetotal

goodsandservicescontractsdisclosed

byaclusterontheGovernment’scontract

registeroverthepreviousthreefinancial

years.Eachcontractdisclosediscounted

asonecontract.Thedatamaybeadjusted

inconsultationwiththerelevantcluster

toremovecontractsexcludedfromthe

target.Thismethodhasbeenadopted

tosetthetargetsasthetotalnumberof

contractsawardedvariesfromyeartoyear

andwillnotbeknowninadvance.

Clustersarerequiredtodisclose

contractsvaluedat$150,000orabove

(includingGST)ontheGovernment’s

contractregister,inaccordancewiththe

GovernmentInformation(PublicAccess)

Act2009.Clustersareencouragedto

discloselowervaluecontractswith

Aboriginalbusinessesforincreased

visibilityofengagements.

Averageclustercontracts(ACC)

Totalclustercontracts(TCC)

ACC = (TCCY1 + TCCY2 + TCCY3)/3

Clustercontractstarget(CCT)

CCT = 0.03 x ACC

Y1, Y2, Y3 = Financial year 1, 2 and 3

Contractcountonlyincludesgoods

andservicescontracts.

How is cluster progress toward the contracts target reported?

TheABNsofverifiedAboriginal

businessesarematchedagainstdisclosed

contractsintheNSWGovernment’s

contractregister.Inresponsetoa

2019policyreviewrecommendation,

subcontractswithAboriginalbusinesses

directlyrelatedtoaNSWGovernment

goodsandservicescontractmaybe

manuallyreportedtoNSWTreasuryand

counttowardthecluster’scontracts

target.Reportingonprogresstowardsthe

targetswillspecifythenumberofdirect

contractsandsubcontractsrepresentedin

thetotalnumbers.

08

Target: 3,000 Aboriginal FTE employment opportunities

The NSW Government target for

supporting employment opportunities

for Aboriginal people is set at a whole-

of-government level. The APP aims

to support an estimated 3,000 FTE

employment opportunities for Aboriginal

and Torres Strait Islander peoples

through NSW Government procurement

opportunities by the end of 2021. This

target commenced in July 2018 through

the previous Aboriginal Procurement

Policy and the revised Aboriginal

Participation in Construction policy.

How is progress toward the employment opportunities target reported?

Reportingagainstthistargetiscaptured

viasupplierreportingofemployment

opportunitiessupportedonNSW

Governmentcontractsvaluedat

$7.5millionorabove.

Theunitofmeasurementforworkforce

isthenumberof‘full-timeequivalent’

workersaccordingtothedefinitionof

FTErelevanttotheindustryinwhich

thecontractoroperates.Suppliersmust

outlinehowtheydefineandmeasureFTE

intheirAboriginalParticipationPlans.

Forthepurposeofthispolicy,suppliers

reportingonnumbersofFTEemployment

opportunitiesforAboriginalorTorres

StraitIslanderpeoplesmustbeableto

demonstratetheirprocesstoconfirm

AboriginalorTorresStraitIslander

heritageinlinewiththeguidanceon

Buy.NSW.

https://buy.nsw.gov.au

09

Governance

NSW Procurement Board

TheNSWProcurementBoardis

responsiblefortheadministration,

monitoringandreportingofthispolicy.

Thisincludes:

> conductingauditsandreviewsof

thepolicy

> dealingwithcomplaintsaboutthe

applicationofthepolicyviaits

establishedcomplaints-handling

procedures

> exemptingspecificprojectsorclasses

ofprojectsandallocatingspecific

requirementsagainstindividual

contracts

> issuingdirectionstoagencies,

includingtheuseofstandardform

contractclausesincontractssubject

tothispolicy.

Procurement complaints

Complaintsaboutprocurementmatters

shouldbedirectedtotherelevant

contractingagency.Complaintsshould

beresolvedinanon-adversarialand

cooperativemanner.TheOfficeof

theSmallBusinessCommissionercan

providemediationservicestosmall

businessesifnecessary.

Ifcomplaintscannotberesolveddirectly

withtheagency,orfurtheractionis

required,complaintsshouldbemanaged

inaccordancewiththeNSWGovernment

ComplaintsManagementGuidelines.

Aboriginal Participation Fund

TheFundreceivesunspentAboriginal

participationfundsfromNSW

Governmentcontractssubjecttothe

policy.ThisFundisadministeredby

TrainingServicesNSW.Decisionsrelating

tothedistributionoffundsaremanaged

byTrainingServicesNSWinconsultation

withtheAboriginalParticipationFund

GovernanceCommittee.Moreinformation

canbefoundintheAPPsupportand

guidancematerials.

Review of the APP

Theoutcomesandeffectivenessof

theAPPwillbereviewedin2022.

TheDeputyOmbudsman(Aboriginal

Programs)hasalegislatedfunctionto

independentlymonitorandassessthe

implementationofprescribedAboriginal

programs,includingOCHRE.This

functionisanintegralpartoftheoverall

accountabilityframeworkforOCHRE.

Further information

Supportandguidancematerialscanbefoundthroughthelinks

providedinthispolicyoronwww.buy.nsw.gov.au.

Forfurtherinformation,pleasecontactBUY.NSWon

1800 679 289ornswbuy@treasury.nsw.gov.au

http://www.buy.nsw.gov.aumailto:nswbuy@treasury.nsw.gov.au

Introduction The APP applies to the procurement of goods, services and construction by Applying the APP — NSW Government agenciesApplying the APP — Government suppliersTarget: 1 per cent addressable spendTarget: 3 per cent goods and services contractsTarget: 3,000 Aboriginal FTE employment opportunitiesGovernanceReview of the APPFurther information