Australia's Indigenous Procurement Policy Undermined by 'Black Cladding'

Australia's Indigenous Procurement Policy is being eroded by "black cladding," a practice where non-Indigenous firms falsely claim Indigenous control to win contracts [1, 2].

This systemic deception diverts critical funding away from genuine First Nations businesses, preventing the policy from achieving its goal of economic empowerment for Indigenous Australians. By masquerading as Indigenous-controlled, these firms secure government work intended to build sustainable wealth within Indigenous communities.

Since its launch approximately 10 years ago, the federal government has spent almost $15 billion ^[2] through the Indigenous Procurement Policy [1, 2]. The program was designed to increase the participation of Indigenous-owned businesses in government procurement, providing a direct economic boost to those who qualify.

However, the emergence of "black cladding" allows companies that are not truly Indigenous-controlled to access these policy-linked contracts [1, 2]. This practice creates an uneven playing field where legitimate Indigenous businesses must compete against larger, non-Indigenous entities that have the resources to mimic the required certification.

The diversion of funds means that the intended social and economic outcomes of the multi-billion-dollar program are not being fully realized [1, 2]. While the spending totals are high, the actual benefit to First Nations entrepreneurs is limited when non-Indigenous firms capture the revenue.

Government oversight of the program has come under scrutiny as these fraudulent claims surface. The ability of non-Indigenous firms to bypass the spirit of the law suggests a gap in the verification process used to certify Indigenous-controlled businesses [1, 2].