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With 1 July 2026 fast approaching, businesses accessing the Indigenous Procurement Policy (IPP) are being urged to review their ownership structures ahead of the federal government's most significant overhaul of the policy since its introduction in 2015. Changes administered by the National Indigenous Australians Agency (NIAA) will tighten eligibility criteria and raise procurement targets across the Commonwealth.
The changes were announced in February 2025 with the stated aim of ensuring the economic benefits of the IPP are genuinely flowing to First Nations people as intended.
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Targets are rising and will keep rising
From 1 July 2025, the target for Commonwealth procurement from First Nations businesses increased to 3% for the 2025–26 financial year, up from the previous 2.5%. Targets will then rise by 0.25% each year, reaching 4% by 2029–30.
The policy appears to be gaining momentum. Over 1,200 Indigenous businesses secured more than 13,000 new contracts during the 2024–25 financial year, valued at $1.6 billion in total. Both the Commonwealth and all portfolios exceeded their 2024–25 number and value of contract targets.
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Eligibility criteria tightening from 1 July 2026
The more significant change for suppliers comes on 1 July 2026. The IPP eligibility criteria will be strengthened to require First Nations businesses to be at least 51% or more First Nations owned and controlled, or registered with the Office of the Registrar of Indigenous Corporations (ORIC), to access the IPP.
This represents a shift from the previous threshold of 50% Indigenous ownership. The change is designed to ensure majority decision-making authority rests with First Nations owners, rather than allowing governance arrangements that could effectively hand control to non-Indigenous partners.
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Cracking down on black cladding
The reforms also take direct aim at a practice known as black cladding. Black cladding refers to illusory arrangements between Indigenous and non-Indigenous persons and businesses for the purpose of gaining access to contracts under the IPP, conduct that may also give rise to liability for misleading and deceptive conduct, akin to greenwashing.
The NIAA will work on identifying opportunities to make it easier for Indigenous Australians to report the practice, and agencies will face increased scrutiny to be alert to it.
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What this means for suppliers
Businesses currently accessing the IPP at the 50% ownership threshold should review their ownership and governance structures ahead of the 1 July 2026 transition. Further details of the transitional arrangements are yet to be determined.
For non-Indigenous businesses that rely on Indigenous suppliers to meet participation targets, existing supply chain partnerships may need to be assessed to ensure those businesses will meet the revised ownership and control criteria once they take effect.
The NIAA has indicated it will publish further guidance on transitional arrangements in the lead-up to the July 2026 changes.
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More Information
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