From 1 July 2026, the federal Indigenous Procurement Policy defines an Indigenous business as one that is at least 51% First Nations owned and controlled, or registered with the Office of the Registrar of Indigenous Corporations. A one-year transition through 2026-27 lets businesses verified under the old 50% threshold move to the strengthened criteria before it applies in full.
The Indigenous Procurement Policy is the Commonwealth's main lever for directing government spend to First Nations businesses. Introduced in 2015, it sets annual targets for the value and volume of contracts awarded to Indigenous businesses, and it allows Mandatory Minimum Indigenous Participation Requirements to be written into high-value contracts, so Indigenous participation becomes a condition of delivery rather than an optional extra.
An Aboriginal Business had to meet specific standards to meet the policy requirements, namely that it has to be least 50% Indigenous owned. That threshold accommodated equal partnerships, including a business owned 50-50 by a First Nations owner and a non-Indigenous partner.
At a National level, Aboriginal business verification is delivered by Supply Nation, the independent organisation the National Indigenous Australians Agency contracts to maintain the national register of Indigenous businesses. Supply Nation applies two tiers:
• Registered: at least 50% Indigenous owned, whichaccommodates equal partnerships with non-Indigenous owners
• Certified: at least 51% Indigenous owned,managed and controlled
That distinction is the key to understanding the reform. The strengthened Indigenous Procurement Policy definition effectively lifts eligibility from the Registered standard toward the Certified standard, where First Nations owners hold both majority ownership and genuine control.
The Indigenous Procurement Policy is the Commonwealth's main lever for directing government spend to First Nations businesses. In February 2025 the Government announced a set of changes to strengthen the policy, following parliamentary inquiries and public consultation held between December 2023 and March 2024.
Three changes matter most for anyone delivering government work:
• The IPP eligibility criteria are being tightened, changing the definition of an Indigenous business
• The Commonwealth procurement target has risenand will keep rising through to 2030
• The National Indigenous Australians Agency isworking to increase transparency and reduce misuse of the policy
The changes are designed to make sure the economic benefit of the IPP genuinely flows to First Nations people, rather than to businesses that carry an Indigenous label without First Nations control.
The central change is to the Indigenous business definition. From 1 July 2026, to access the IPP a business must be:
• 51% or more First Nations owned and controlled, or
• registered with the Office of the Registrar of Indigenous Corporations.
The shift from the previous 50% ownership threshold to 51% owned and controlled looks small, but the important word is “controlled”. Under the old rule, a business split 50-50 between a First Nations owner and a non-Indigenous partner could qualify even where the First Nations owner did not hold decisive control. The strengthened test requires majority ownership and genuine control, so First Nations owners are empowered to actually run the business and exercise their rights as majority owners.
This is als othe Government's main structural response to black cladding, the practice of a non-Indigenous business presenting itself as Indigenous owned to win contracts. Requiring 51% ownership and control makes that harder to sustain. The Government has said it will continue to pursue other measures too, including making it easier for First Nations people to report black cladding and providing guidance and support for First Nations business owners.
The change does not take full effect overnight. A transition period applies through the 2026-27 financial year, giving First Nations businesses time to understand the change and arrange verification under the strengthened criteria if they choose.
During 2026-27, a business is eligible to access the IPP if it meets either:
• the original criteria of at least 50% Indigenous ownership, or
• the strengthened criteria of at least 51%Indigenous ownership and control
In practice, this is the window for businesses currently verified at the 50% level to take the step up to verified 51% ownership and control. Supply Nation is central to that verification, and the agency is approaching the market through AusTender to appoint a provider for thestrengthened verification services. First Nations businesses that want to keepaccessing government work through the IPP should use the transition year ratherthan wait for it to close.
Alongside the definition change, the ambition of the policy is rising. On 1 July 2025 the target for the Commonwealth and its portfolios to buy from Indigenous businesses increased to 3%. That target will keep increasing by 0.25% each year until it reaches 4% by 2030, and the Government is reviewing how the target is calculated and measured.
For agencies and their suppliers, that means the pressure to deliver verified Indigenous procurement is growing at the same time as the pool of eligible businesses is being more tightly defined. The businesses that count toward the target will be a more precisely defined group, which raises the stakes on getting supplier eligibility right.
For headcontractors on Commonwealth work, the definition change has a direct consequence. Many high-value government contracts carry Mandatory Minimum Indigenous Participation Requirements, and the Indigenous businesses you engage need to remain eligible under the strengthened criteria for that spend to count.
That makes supplier verification a live reporting issue, not a one-off tick at engagement. You need to know which of your Indigenous suppliers are verified at 51% owned and controlled, which are relying on the transition, and what your exposure is if a supplier does not re-verify before 2026-27 closes.
SocialPro is a system of record for social procurement, built to hold Indigenous business spend and supplier data to the standard a Commonwealth client or auditor expects.
• Tracks Indigenous business spend against contract participation requirements at the point of transaction
• Records supplier verification status, so achange in eligibility is visible before it becomes a reporting problem
• Keeps ABN-level supplier evidence structured and traceable for audit
• Standardises reporting across contracts so participation against the target reads consistently.
The strengthened Indigenous Procurement Policy raises both the bar and the ambition: a tighter definition of who counts, and a higher target to meet. The contractors who keep clean, current records of supplier eligibility and Indigenous spend are the ones who can prove compliance as the rules tighten. To see how SocialPro supports Indigenous Procurement Policy compliance, book a demo now.
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