Aboriginal Participation in Construction Policy

Policy

Updated: 30 Jun 2018

Increasing employment opportunities for Aboriginal people in the construction industry.

The Aboriginal Procurement Policy (APP) and the Aboriginal Participation in Construction Policy (APIC) are merging into a new policy from 1 January 2021.

Preview the draft Aboriginal Procurement Policy starting 1 January 2021.

1. Policy context

1.1 Purpose

The Aboriginal Participation in Construction (APIC) Policy supports the NSW Government’s framework Growing NSW’s First Economy. It meets the specific aims of increasing the number of Aboriginal people employed, and the number of Aboriginal-owned businesses under the NSW government plan for Aboriginal affairs, OCHRE.

The APIC policy recognises that industry has a key role to play in broadening opportunities for Aboriginal people and that the NSW Government can use its relationship with business to deliver positive social outcomes.

1.2 Objective

The objective of the APIC policy is to create opportunities for Aboriginal-owned businesses and encourage Aboriginal employment and training through the supply chain of NSW government contracts.

1.3 Policy target

The NSW government target for supporting employment opportunities is set at a whole-of-government level.

In conjunction with the Aboriginal Procurement Policy, the APIC policy will aim to support an estimated 3,000 full-time equivalent employment opportunities for Aboriginal people through NSW government procurement activities by 2021.

2. Applying the APIC policy

The APIC policy applies to all NSW government departments, statutory authorities, trusts and other government entities (collectively referred to as ‘agencies’).

State-owned corporations are encouraged to adopt aspects of the policy that are consistent with their corporate intent.

Construction projects for the purposes of the APIC policy include:

construction-related building maintenance and civil engineering
construction-related support activities, such as financial, advisory, architectural and professional services may be included where it is considered appropriate to achieve the policy objective
joint public and private sector
those undertaken on land not owned by the government or where the built asset will be owned by a non-government entity.

2.1 Categories of construction projects covered by the APIC policy

On 1 July 2018 the APIC policy became mandatory for 3 categories of construction projects:

Category 1

Projects nominated by an agency that are primarily directed to one or more Aboriginal communities. This includes projects where an Aboriginal community is the sole or predominant beneficiary, is a key user group or a predominant stakeholder.

Category 2

All other construction projects where the estimated value is over $10 million.

Category 3

All other construction projects where the estimated value is over $1 million.

All figures exclude GST.

2.2 Aboriginal participation requirement

Under the APIC policy a minimum of 1.5% of project spend must be dedicated to Aboriginal participation. Agencies are encouraged to set higher requirements where appropriate. Agencies are responsible for setting the project spend and Aboriginal participation requirements on each project.

Aboriginal participation must be directed towards eligible spend. Eligible spend includes Aboriginal employment, engagement of Aboriginal-owned businesses, education and training, and engagement or consultation with Aboriginal organisations or businesses.

2.3 Exclusions from project spend

Exclusions from project spend are determined by agencies and may include:

specialised capital equipment (for example, tunnel exhaust fans, tunnel boring machines, batch plants) where no suitable Australian supplier exists in the market
materials imported from overseas where no suitable Australian supplier exists in the market
existing or new non-contract or project-specific assets apportioned to the contract or project, where they are used in delivery of the contract or project
property such as acquisitions, indirect leasing costs, extra land, adjustments
non-construction related services.

The application of any exclusion is at the discretion of the agency.

2.4 Aboriginal-owned businesses

An Aboriginal-owned business is one that is considered to be an Aboriginal owned business through recognition by an appropriate organisation, such as:

NSW Indigenous Chamber of Commerce
an organisation representing Aboriginal businesses based in another state or territory that is a member of a First Australians Chamber of Commerce and Industry
Supply Nation.

The NSW Procurement Board is working with Aboriginal organisations to establish a central register of Aboriginal owned businesses, to be made available for NSW Government agencies.

3. NSW Government agencies

3.1 Agency requirements

Agencies must:

apply the minimum percentage of project spend for Aboriginal participation to relevant construction projects
monitor supplier compliance and reporting requirements, and assess and validate reports
apply any further measures approved by the NSW Procurement Board in support of the APIC policy objective
ensure all suppliers are aware of, and comply with, their obligations under the APIC policy
provide APIC policy guidance and support during the tender and project life cycle to suppliers, Aboriginal-owned businesses and local Aboriginal communities in the geographic location where the project will take place
ensure contracts include supplier obligations under the policy, including fully allocating the percentage for Aboriginal participation to eligible spend types, and where suppliers are unable to achieve this, distribution of the balance to the APIC policy’s list of approved bodies.

Agencies may apply additional measures to achieve the APIC policy objective, such as:

directly negotiate with suitably qualified Aboriginal-owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $250,000
run a closed tender with prequalified Aboriginal-owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $1 million
increase the percentage for Aboriginal participation
introduce incentives to recognise suppliers where they exceed policy requirements, and consequences for suppliers unable to fully allocate to eligible spend by distributing any remainder of eligible spend to approved bodies.

4. NSW Government suppliers

The NSW Government values the contribution that the business community is making towards increasing Aboriginal participation in the economy. The government is committed to working with suppliers to create opportunities for Aboriginal-owned businesses and to support employment and training of Aboriginal people.

Suppliers to NSW Government for categories 1, 2 and 3 construction projects are required to comply with the requirements in this policy and additional requirements set by agencies and the NSW Procurement Board in support of the policy objective.

Suppliers are encouraged to engage with local Aboriginal communities, Aboriginal organisations or Aboriginal industry bodies to support achievement of Aboriginal participation requirements by supporting identification and engagement of Aboriginal employees or Aboriginal-owned businesses.

4.1 Eligible spend for Aboriginal participation

Suppliers must allocate the minimum 1.5%, or a higher percentage as agreed with the contracting agency, of project spend to eligible spend.

Eligible spend may be distributed from the date of the contract award and up to project completion.

Eligible spend does not include donations or gifts to public benevolent institutions unless programs have been preapproved by the contracting agency and identified as programs specifically designed to generate capability and employment of Aboriginal people for future construction projects.

Expenses must not to be duplicated in different types of eligible spend for example the same costs related to trainees and apprentices for a project cannot be included as costs in both employment and education.

There are four types of eligible spend for Aboriginal participation.

Aboriginal employees (including apprentices, trainees and office support roles) by suppliers and subcontractors engaged on projects
Aboriginal employees supporting Aboriginal participation requirements for the project (reasonable percentage of salary correlating to time allocated to individual projects)
Labour hire.

Engagement of Aboriginal owned businesses to provide related goods and services to the project, such as:

raw materials and plant
cleaning and maintenance services
on-site food and beverage services
professional services such as design consultancy, insurance, work health and safety, cultural awareness training and Aboriginal cultural heritage assessments.

Expenses for training of Aboriginal employees engaged in the planning, design and delivery of the project
Expenses paid for by the supplier for the development and delivery of Aboriginal education programs and courses to its employees.

Eligible training and educating activities are to be pre-approved by the contracting agency and provided by registered training organisations or TAFE NSW.

Expenses approved by the contracting agency for the engagement of Aboriginal organisations or Aboriginal industry bodies directly related to support achievement of policy requirements by supporting identification and engagement of Aboriginal employees or Aboriginal owned businesses.

4.1.1 Achieving the full allocation for Aboriginal participation

The full allocation for Aboriginal participation must be distributed to eligible spend types. Where suppliers are unable to achieve this, they must distribute the remainder to the APIC policy’s list of approved bodies:

Approved bodies support programs to improve capability and employment outcomes for Aboriginal people for future construction projects.

The allocation for Aboriginal participation from suppliers to the approved bodies and the distribution of these funds by the approved bodies is monitored by the NSW Procurement Board.

4.2 Reporting

The value of the construction project dictates reporting requirements. Suppliers must provide an Aboriginal participation plan specific to each project and report:

monthly on progress towards the requirements in the Aboriginal participation plan on all projects over $10 million
quarterly on progress towards the requirements in the Aboriginal participation plan on all projects up to $10 million.

Aboriginal participation plans are part of the tender response and approved by the contracting agency. The requirements of the approved plan are to be entered in the APIC policy reporting portal and reported against as per the policy reporting requirements.

A final Aboriginal participation report must be provided by suppliers through the APIC policy reporting portal at the completion of the construction project and identify if Aboriginal participation requirements were met.

The information from supplier plans and reports may be published and will be used for annual reviews of the policy.

Where an Aboriginal owned business is awarded the construction contract, the Aboriginal-owned business must provide regular reporting on the employment of Aboriginal people to contracting agencies. Where possible NSW Government will leverage the existing employee information available via Supply Nation and NSW Indigenous Chamber of Commerce or another appropriate organisation.

4.3 Requirements for Aboriginal-owned businesses

Aboriginal owned businesses supplying direct to NSW Government are exempt from the 1.5 per cent of project spend requirement for Aboriginal participation however the business must provide regular reporting on the employment of Aboriginal people within the business.

Aboriginal businesses must meet any additional measures applied by the contracting agency in support of the APIC policy objective.

5. Governance

5.1 NSW Procurement Board

The NSW Procurement Board is responsible for the administration, monitoring and reporting of this policy. This includes:

Maintaining the website and publishing Aboriginal participation plans, progress reports and Aboriginal participation reports.
Governance of the list of approved bodies.
Conducting regular or ad-hoc audits and reviews of the policy.
Dealing with complaints about the application of the policy via its established complaints handling procedures.
Exempt specific projects or classes of projects and allocate specific requirements against individual contracts based on opportunity assessment and identification by geography, spend, market supply and capacity.
Issue directions to agencies, including use of standard form contract clauses, on projects subject to this policy.

The procurement board may delegate any of these functions to the Construction Leadership Group (CLG) or the chair of the Procurement Board.

5.2 Annual review

The NSW Procurement Board will undertake an annual review of compliance to requirements and progress towards the target, in consultation with Aboriginal Affairs NSW, NSW government agencies and industry. The policy requirements, including the requirement for 1.5% of project spend that must be dedicated to Aboriginal participation, will be assessed at each annual review.

5.3 Evaluation of the policy

The outcomes of the APIC policy will be reviewed in accordance with the NSW government program evaluation guidelines. This outcome review will be undertaken in 2022, 12 months after the NSW government target is due to have been achieved.

The APIC policy is covered under the OCHRE Plan – the NSW Government’s Aboriginal affairs plan.

The Deputy Ombudsman (Aboriginal Programs) has a legislated function to independently monitor and assess the implementation of prescribed Aboriginal programs including OCHRE. This function is an integral part of the overall accountability framework for OCHRE.

Related content

Policy archive

What is the Aboriginal Participation in Construction (APIC) policy?

The APIC policy is a whole-of-government procurement policy creating opportunities for Aboriginal-owned businesses and supporting Aboriginal employment and training through the NSW Government construction supply chain.

When did the APIC policy come into effect?

The APIC policy has been mandatory for relevant construction projects since 1 July 2016. An updated policy came into effect on 1 July 2018.

Why did the NSW Government introduce the APIC policy?

The APIC policy supports the aims of the NSW Government's Plan for Aboriginal Affairs, OCHRE (Opportunity, Choice, Healing, Responsibility, Empowerment). It fosters the growth of the first economy and contributes to increased prosperity for NSW’s Aboriginal community through business and employment opportunities.

What is the APIC policy’s target?

In conjunction with the NSW Government’s Aboriginal Procurement Policy for goods and services, the APIC policy aims to support 3,000 full-time equivalent employment opportunities for Aboriginal people through NSW Government procurement activities by 2021.

What are the APIC policy requirements?

The APIC policy requires a minimum of 1.5% of the project spend on relevant NSW Government construction contracts to be dedicated to Aboriginal participation.

What was new about the updated 2018 APIC Policy?

The 2018 APIC policy encourages agencies to:

directly negotiate with suitably qualified Aboriginal owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $250,000
run a closed tender with prequalified Aboriginal owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $1 million.

To enhance accountability and the NSW Government’s ability to measure the policy effectiveness, the 2018 APIC policy increases the supplier reporting frequency to:

monthly on projects valued over $10 million
quarterly for projects relevant to the policy and valued under $10 million.

Reporting for new contracts under the 2018 APIC Policy will take place electronically through a new Aboriginal Participation Portal.

Who does the APIC policy apply to?

The APIC policy applies to all NSW Government departments, statutory authorities, trusts and other government entities (collectively referred to as ‘agencies’).

State-owned corporations are encouraged to adopt aspects of the APIC policy that are consistent with their corporate intent.

What type of procurement does the APIC policy apply to?

The APIC policy applies to construction procurement.

What construction procurement and construction projects are subject to the APIC policy?

Construction projects for the purposes of the APIC policy include:

construction related building maintenance and civil engineering
construction related support activities, such as financial, advisory, architectural and professional services, where it is considered appropriate to achieve the APIC policy objective
joint public/private sector
those undertaken on land not owned by the government or where the built asset will be owned by a non-government entity.

The APIC policy sets requirements for three categories of construction projects:

Category 1. Projects nominated by an agency that are primarily directed to one or more Aboriginal communities. This includes projects where an Aboriginal community is the sole or predominant beneficiary, a key user group or a predominant stakeholder.

Category 2. All other construction projects where the estimated value is over $10 million.

Category 3. All other construction projects where the estimated value is over $1 million.

All figures exclude GST.

What is an Aboriginal-owned business?

For the purposes of the APIC policy, an Aboriginal-owned business is one that is considered to be an Aboriginal owned business through recognition by an appropriate organisation, such as:

NSW Indigenous Chamber of Commerce
an organisation representing Aboriginal-owned businesses in another state or territory that is a member of the First Australians Chamber of Commerce and Industry
Supply Nation.

Where required, the NSW Government may seek additional information to validate the business is an Aboriginal-owned business.

What requirements apply where construction projects are awarded to Aboriginal-owned businesses?

Aboriginal-owned businesses are not required to dedicate the minimum 1.5% of the project spend to Aboriginal participation but are required to report on the number of Aboriginal employees within the business.

Does the APIC policy apply to Torres Strait Islander people and Torres Strait Islander owned businesses?

The objectives, targets and measures of the APIC policy include Aboriginal and Torres Strait Islander owned businesses and Aboriginal and Torres Strait Islander peoples.

Do the APIC policy requirements overlap with those of the Aboriginal Procurement Policy?

The APIC policy is separate to the Aboriginal Procurement Policy, however, both policies contribute to the NSW whole-of-government target to support 3,000 employment opportunities for Aboriginal people through NSW Government procurement activities by 2021.

Where else can I get information about the APIC policy?

For further information and support regarding the APIC policy please contact the NSW Procurement Service Centre.

What are my agency’s obligations under the APIC policy?

Agencies must:

apply tender and contract requirements for suppliers to distribute a minimum of 1.5% of project spend to Aboriginal participation for construction projects covered under the APIC policy
ensure all relevant suppliers are aware of and comply with their obligations under the APIC policy by including relevant contractual obligations
monitor supplier compliance and reporting requirements
comply with additional requirements as directed by the NSW Procurement Board.

What measures are optional for agencies under the APIC policy?

Agencies are encouraged to:

directly negotiate with suitably qualified Aboriginal-owned businesses for Category 1 projects valued up to $250,000
run a closed tender with prequalified Aboriginal-owned businesses for contracts valued up to $1 million
increase the minimum percentage of project spend to be directed to Aboriginal participation
introduce incentives for suppliers where they exceed policy requirements.

What can the percentage of project spend for Aboriginal participation be used for?

The minimum 1.5% of project spend can be allocated to expenses related to the project’s design, planning, or delivery to promote economic participation of Aboriginal people and Aboriginal-owned businesses.

Eligible spend may be incurred and allocated from the date of the contract award and up to project completion.

Eligible spend does not include donations or gifts to public benevolent institutions unless programs have been pre-approved by the contracting agency and identified as programs specifically designed to generate capability and employment of Aboriginal people for future construction projects.

There are 4 types of eligible spend for Aboriginal participation spend:

employment
engagement of Aboriginal-owned businesses
education / training
engagement / consultation.

What can agencies exclude from project spend when calculating the percentage of spend to be allocated to Aboriginal participation?

Exclusions from project spend are determined by the contracting agency and may include:

specialised capital equipment (for example tunnel exhaust fans, tunnel boring machines, batch plants) where no suitable Australian supplier exists in the market
materials imported from overseas where no suitable Australian supplier exists in the market
existing and/or new non-contract/project specific assets apportioned to the contract/project, where they are used in delivery of the contract/project
property (such as acquisitions, indirect leasing costs, extra land, adjustments)
non-construction related services.

The application of any exclusion is at the discretion of the agency.

What are Aboriginal Participation Plans and Aboriginal Participation Reports?

The Aboriginal Participation Plan describes how suppliers will meet the minimum percentage of project spend for Aboriginal participation. They are part of the tender response and approved by the contracting agency. The requirements of the approved plan are to be entered in the Aboriginal Participation Portal and reported against as per the policy reporting requirements. Suppliers are required to regularly report on their progress towards the requirements in the Aboriginal Participation Plan in the Aboriginal Participation Portal.

Suppliers must provide the Aboriginal Participation Report via the Aboriginal Participation Portal at the completion of the construction project and identify if the Aboriginal participation requirements were met.
For further information and support regarding the APIC policy please contact the NSW Procurement Service Centre.

How does the APIC policy benefit Aboriginal-owned businesses?

The APIC policy delivers a broad range of opportunities for Aboriginal-owned businesses through the NSW Government supply chain by:

mandating 1.5% of a project spend be allocated to Aboriginal participation which may include engagement of Aboriginal owned businesses
allowing agencies to directly negotiate with suitably qualified Aboriginal owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $250,000
allowing agencies to run a closed tender with prequalified Aboriginal owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $1 million.

All figures exclude GST.

Can an Aboriginal-owned business not formally recognised by Supply Nation or the NSW Indigenous Chamber of Commerce (NSWICC) benefit from the APIC policy?

Aboriginal-owned businesses recognised as Aboriginal-owned by appropriate organisations other than Supply Nation or the NSWICC are eligible to supply to government under the APIC policy.

Where required, the NSW Government may seek additional information to validate the business is an Aboriginal owned business.

What can Aboriginal-owned businesses do to be considered for NSW Government contracts?

Aboriginal-owned businesses should:

ensure they are recognised as an Aboriginal owned business by an appropriate organisation
identify and engage with NSW Government agencies that may require the types of goods or services provided by their business
register under relevant prequalification schemes for goods and services provided by their business
respond to agencies' procurement opportunities by providing proposals that meet agency needs and are offered on competitive terms
seek feedback from agencies if a business proposal is not accepted.

What happens if I can't distribute the full allocation of project spend to Aboriginal participation?

Master Builders Association
Literacy for Life Foundation.

The approved bodies support programs to improve capability and employment outcomes for Aboriginal people for future construction projects.

The allocation for Aboriginal participation from suppliers to the approved bodies and the distribution of these funds by the approved bodies is monitored by the NSW Procurement Board.

How do I report on Aboriginal participation?

Suppliers must provide an Aboriginal Participation Plan specific to each project and report against this in the Aboriginal Participation Portal including:

monthly on progress towards the requirements in the Aboriginal Participation Plan on all projects valued over $10 million
quarterly on progress towards the requirements in the Aboriginal Participation Plan on all projects valued up to $10 million.

Aboriginal Participation Plans are part of the tender response and approved by the contracting agency. The requirements of the approved plan are to be entered in the APIC policy reporting portal and reported against as per the APIC policy reporting requirements.

A final Aboriginal Participation Report must be provided by suppliers through the Aboriginal Participation Portal at the completion of the construction project and identify if Aboriginal participation requirements were met.

For further information and support regarding the APIC policy please contact the NSW Procurement Service Centre.