Turning Aboriginal procurement opportunities into real contracts
While there is widespread support in Australia of Aboriginal procurement initiatives in both the public and private sector, the outcomes don't always reflect the intent. This situation can be addressed by both the organisations seeking to invest in Aboriginal procurement and the Aboriginal suppliers who want to win contracts.
What can you do as a company director to achieve your procurement targets?
Promote and enable a positive internal environment that sees Aboriginal procurement as beneficial to the company and worth investing in
Use innovative and targeted sourcing strategies to identify, contact, build a relationship with and support Aboriginal suppliers
Put in place internal management systems that specifically address Aboriginal procurement conditions
Implement a realistic and robust internal and external cultural engagement program
What can you do as a director of an Aboriginal organisation to win contracts?
Register with Aboriginal Business Directory WA and/or Supply Nation
Offer goods or service at or near competitive market value - meeting the value for money criteria
Promote accountable and transparent internal decision making
Understand how to identify and manage contract risks
Focus on:
Quality of the supply
Fitness for purpose
Experience and performance history
Flexibility of proposal and innovation opportunities
The use of public and private procurement to achieve social outcomes is a worldwide phenomenon. In Australia, both WA State and Federal government policy now actively promote Indigenous procurement targets either in percentage or monetary terms.
In 2015, the Australian Commonwealth Government introduced an Indigenous Procurement Policy (IPP) with a target of a minimum 3% of contracts to be awarded to Indigenous businesses by 2020, the three percent figure reflecting the proportion of Indigenous people in Australia’s population.
Recent amendments to the WA State Supply Commission's Open and Effective Competition Policy allows state agencies to engage a registered Aboriginal business without undertaking a competitive process for contracts under $250,000 in value.
ITS NOT A FREE RIDE - no contract will be given to a business unless it can demonstrate 'value for money', but the targets will presumably put pressure on government departments to seek out Aboriginal owned companies that can provide goods and services for the government.
While the private sector has been promoting Reconciliation Action Plans (RAPs) and Indigenous procurement opportunities for several years, their experience indicates that ITS NOT AN EASY RIDE, EITHER.
There are already success stories - of mutually beneficial, respectful and professional business relationships between corporations and their Indigenous suppliers. But there are also many stories of what could have been.
Despite obligations to engage Aboriginal businesses in land access agreements for many extractive projects across Australia, the outcomes have not met Aboriginal expectations.
Often the lack of engagement by resource companies is blamed on the absence of Aboriginal businesses with sufficient capacity to meet complex tender requirements. By the time an interested Aboriginal business has worked to qualify for tenders, the tender is closed and the opportunity is lost.
Many extractive companies claim they maintain processes that support Aboriginal business engagement and yet fall back on a ‘best endeavours’ defence for lagging performance, often blaming a lack of capacity of Aboriginal groups.
Standard systems and approaches for project sourcing generally fail to support Aboriginal businesses to qualify for work and valuable opportunities are often lost for engaging Aboriginal businesses.
Some industry initiatives are interpreted by Aboriginal people as Public Relations exercises, rather than real attempts to address the complexity of Aboriginal business development.
The absence of a consistent process to assess the capacity of resource companies to deliver on their Aboriginal business engagement commitments hinders progress.
The Procurement Report noted a number of issues which arise when implementing a procurement policy:
From the Aboriginal business perspective:
Difficulty accessing supply chain
Tough business environment
Small steps have long term gains
Joint ventures can be good and bad
Want the opportunity to perform
Aboriginal capacity not recognised
Lack of transparency of sourcing processes
From the resource company perspective:
Importance of commercial competitiveness of Aboriginal businesses
Cost and risk sensitivity
Supporting businesses in a competitive environment
Cyclical nature of commodities
Internal cross cultural capacities
Need for management systems for Aboriginal procurement
Importance of corporate champions and internal recognition
So what can you do as a company director to achieve your procurement targets? As we mentioned above, the Procurement Report suggests:
Promote and enable a positive internal environment that sees Aboriginal procurement as beneficial to the company and worth investing in
Use innovative and targeted sourcing strategies to identify, contact and support Aboriginal suppliers
Put in place management systems specifically catering to Aboriginal procurement
Implement competent external engagement
What can you do as a director of an Aboriginal organisation to win contracts?
Register with Aboriginal Business Directory WA and/or Supply Nation
Offer goods or service at or near competitive market value - meeting the value for money criteria
Promote accountable and transparent internal decision making
Understand how to identify and manage contract risks.
Focus on:
Quality of the supply
Fitness for purpose
Experience and performance history
Flexibility of proposal and innovation opportunities
If you're an Aboriginal business seeking procurement opportunities or a private company seeking Aboriginal business partners and and would like further information, please contact these organisations:
The Aboriginal Business Directory WA provides Aboriginal businesses in Western Australia with an opportunity to promote their products and services to potential buyers from government and private organisations.
Supply Nation is a directory of Indigenous businesses for government and private organisations to use to fulfill their procurement targets.
The First Australians Chamber of Commerce and Industry (FACCI) is running Indigenous Procurement Policy training sessions for Indigenous businesses and interested government officers in June - August 2016, around Australia. See their website for more details.
For more information about FDIO visit www.fdio.com.au or email info@fdio.com.au
