- What is a certified supplier?
- What is the criteria?
- No size limitation could cause issues
- The trouble with the 50% ownership clause
Previously I have written on the topic of ‘What constitutes an Indigenous Supplier?’ In this article I discuss the definition of a Certified Supplier according to Supply Nation (the Federally funded premier business-to-business membership body dedicated to growing diversity within the supply chain in both the public and private sectors).
Their first three criteria for full certification are:
- Ownership – at least 51 per cent ownership of the company by an Indigenous Australian(s).
- Management – the company is led / managed by a Principal Executive Officer who is an Indigenous Australian.
- Control – the key business decisions regarding the company’s finances, operations, personnel and strategy are made by an Indigenous Australian(s).
Recently, Supply Nation has launched Indigenous Business Direct – Australia’s premier listing of Indigenous business, which will allow businesses which are 50% Indigenous owned to be listed on the ‘Registered’ list and not the fully certified list. The reasons behind this are to get more businesses on the list, and to accommodate small businesses owned by husbands and wives where one partner is non-Indigenous.
I am concerned however, that given there is no size limitation and that this could lead the way to joint ventures with much larger companies who are looking to enter the Indigenous supply chain. The desire to do this is going to be increased due to the change in federal government procurement policies from July 1. After this, 3% of federal spending will need to be with Indigenous businesses who only need to meet the ‘Registered’ criteria.
I have observed and worked with many of these types of Joint Ventures as they are common at mine sites in the Pilbara. Some of the things I have observed (even with 50% ownership) are:
- The Aboriginal participants in the JV rarely have any control over key business decisions
- Management is almost never led by an Indigenous Australian or even shadowing project manager positions (to support improving the skills of an Indigenous Australian) are rarely supported
- The Aboriginal participants only benefit if the JV partner actually lets them, as they can manipulate the JV outcomes to whatever they like through management fees.
Given the new directory listing has dropped ownership requirements from 51% to 50% I think we need some clarification about management and control. Who is making the decisions about the business? Do Aboriginal people have any control within the business? And who is going to monitor these crucial facets to ensure the objectives of these policy changes are met?
The federal government has implemented a substantial opportunity for Indigenous business to benefit from, so that can we can get some form of a level playing field. But we can’t deny there are opportunists that will take advantage of the loose eligibility criteria, in its current form.