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New report reveals suppliers are pretending to be Indigenous to secure government contracts

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Suppliers are claiming to be Indigenous to secure lucrative government procurement contracts, according to a new report from the Independent Commission Against Corruption (ICAC) South Australia.

Commissioner Ann Vanstone KC released the highly anticipated ‘Buying Trust: Corruption Risks in Public Sector Procurement’ report, revealing that submissions had been received alleging some suppliers misrepresent their Aboriginal identity to obtain an advantage in procurement.

This is a practice known as ‘black cladding’, which non-profit organisation Supply Nation said can mean different things to different people.

Australia’s leading database of verified Indigenous businesses states that its definition of an Indigenous business is at least 50 percent owned by an Aboriginal or Torres Strait Islands person(s), which is a definition shared by Australia’s federal and state governments.

“Supply Nation considers ‘black cladding’ the practice of a non-Indigenous business entity or individual taking unfair advantage of an Indigenous business entity or individual for the purpose of gaining access to otherwise inaccessible Indigenous procurement policies or contracts,” it said.

“Unfair advantage involves practices and arrangements that result in the disadvantage or detriment to an Indigenous business, or that do not represent a genuine demonstrated level of equitable partnership and benefit.”

Of the report’s 18 recommendations, two focused on tackling the issue of black cladding.

ICAC said public authorities should prevent non-Aboriginal suppliers from taking unfair advantage of schemes that exist to help Aboriginal suppliers win public sector contracts.

They can do this by verifying the status of suppliers claiming Aboriginal identity, which may mean ensuring that an Aboriginal supplier is registered with the Office of the Industry Advocate or referring joint ventures with non-Aboriginal capacity partners to Supply Nation for verification.

For South Australian construction projects valued over $50 million, 20 percent of labour force hours must be undertaken by groups that include Aboriginal job seekers.

ICAC said that while it had not received any submissions about misreported labour hours in South Australia, this had been reported in other jurisdictions where work is not allocated to the Aboriginal business once a joint venture bid is successful.

It recommended that public authorities should conduct random audits of contracts that are required to have a mandated proportion of labour force hours to be performed by nominated groups, with any non-compliance reported to the Office of the Industry Advocate.

Under the state government’s Aboriginal Economic Participation Strategy, which intends to increase Aboriginal participation in the South Australian economy, additional weighting is given to tenders with an Aboriginal owner or if there is a joint venture arrangement between Aboriginal and non-Aboriginal partners.

The full report is available here.

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