Strong support for the NSW Aboriginal Procurement Policy (APP) is being undermined by inconsistent implementation, limited transparency and ongoing concerns around compliance, according to a new report by the NSW Ombudsman.
The NSW Aboriginal Procurement Policy: Implementation Assessment found that, while the policy has helped drive demand for Aboriginal businesses since its commencement in January 2021, systemic issues are preventing it from achieving its full potential.
The Ombudsman’s review assessed whether the policy’s targets had been met, whether agencies had complied with its requirements and what reforms are needed to improve outcomes.
It draws on consultations with organisations including the NSW Coalition of Aboriginal Peak Organisations, the NSW Indigenous Chamber of Commerce, Supply Nation, the NSW Yarpa Hub and the NSW Aboriginal Business Taskforce.
The APP is a mandatory NSW Government policy designed to grow the state’s First Nations economy by increasing procurement from Aboriginal businesses while creating employment opportunities for Aboriginal and Torres Strait Islander people.
It includes agency spend targets, contract targets and Aboriginal participation requirements for major procurements, alongside provisions allowing agencies to directly procure from Aboriginal businesses for contracts worth up to $250,000.
NSW Treasury data shows agency spend with Aboriginal businesses consistently exceeded the one percent addressable spend target between July 2021 and June 2025.
Actual spend over the four-year period reached $1.6 billion, exceeding the $868 million cumulative target by $741 million (85 percent).
NSW Ombudsman Paul Miller said there was broad confidence in the policy’s purpose, despite widespread concerns about its implementation.
“There is widespread support among stakeholders we engaged with for the intent and objectives of the Aboriginal Procurement Policy, providing a foundation of trust and goodwill to build upon,” he said.
“The Policy is viewed by stakeholders as an integral lever for supporting the growth of Aboriginal businesses, employment opportunities and encouraging economic prosperity within Aboriginal communities.”
Despite this, stakeholders identified significant shortcomings in how the policy is being applied across government, with one of the most pressing concerns being the delayed release of a revised policy following NSW Treasury’s 2023 review.
According to the Ombudsman, the absence of an updated policy has created uncertainty and slowed momentum for reform.
“The failure to publish a revised Policy as scheduled has prolonged uncertainty,” he said.
“It also appears to be eroding the generally positive views of Aboriginal stakeholders regarding the manner in which NSW Treasury undertook its 2023 review.”
NSW Treasury advised the Ombudsman that publication of the revised APP had been influenced by broader government priorities, including development of the proposed Local Jobs First Bill 2026, and indicated it would consider publishing an update outlining its approach.
The assessment also highlights concerns around agency compliance and contractor behaviour, including “black cladding”, where non-Indigenous businesses misrepresent Aboriginal ownership or control to gain access to contracts and opportunities meant for Aboriginal businesses.
The Ombudsman found that perceptions of compliance and integrity risks continue to undermine stakeholder confidence, recommending stronger auditing, reporting and enforcement mechanisms to address misconduct.
He also argues that current reporting focuses too heavily on procurement spend rather than on meaningful economic and employment outcomes, and lacks sufficient contract-level transparency.
To strengthen the policy, the Ombudsman has recommended reform in four key areas:
- Publishing a revised APP with ambitious but achievable targets and a clear implementation timeline
- Improving transparency through enhanced reporting
- Strengthening audit and compliance activities
- Introducing more effective mechanisms to detect and respond to black cladding and other integrity risks
The findings build on the NSW Government’s own 2023 review of the policy, which attracted more than 2,000 pieces of stakeholder feedback.
It similarly concluded that while the APP had delivered positive outcomes, significant improvements were needed to simplify procurement processes, improve consistency across agencies and make it easier for government to engage with Aboriginal businesses.
