Company owners are pretending to be Indigenous to gain advantage when vying for lucrative government contracts, a new report has found.

The Independent Commissioner Against Corruption, Ann Vanstone KC's report into public sector procurement found businesses were faking being Aboriginal to gain an edge over other suppliers, while other companies were claiming to employ Indigenous workers for the same benefit.

Several claims of 'Black cladding' were detailed in the report, released last week after ICAC surveyed South Australian businesses to identify corruption risks within public sector procurement processes.

ICAC was told some non-Aboriginal companies would engage Indigenous businesses as subcontractors to secure contracts, but then not use them once their tenders were successful.

"It was also alleged that once a joint venture bid is successful, work is not allocated to the Aboriginal business," the report read.

Ms Vanstone recommended public authorities strengthen verification of businesses that claimed to have Indigenous ownership, so non-Indigenous suppliers ceased taking unfair advantage of schemes meant to benefit First Nations suppliers bidding for public sector contracts.

The report stated such verification could include checking a supplier was registered as an Aboriginal business with the Office of the Industry Advocate, or by referring joint ventures to Supply Nation for confirmation.

Under the state government's Aboriginal Economic Participation Strategy, which aims to boost Aboriginal participation in the economy, some tenders are given a greater weighting if the company or business is owned by an Aboriginal person, or if there is a joint venture arrangement between Aboriginal and non-Aboriginal entities.

For the purposes of the policy, an Aboriginal business is generally one that is 50 per cent or more owned by an Aboriginal resident or residents.

For South Australian construction projects valued at more than $50 million, 20 per cent of labour force hours must be undertaken by groups that include Aboriginal job seekers.

The report stated that ICAC had not received claims about misreported labour hours, however it noted such occurrences had been alleged in other jurisdictions and, as such, it recommended that public authorities conduct random audits to ensure compliance.

SA Aboriginal Affairs minister Kyam Maher said he would consult ministerial colleagues about the claims in the report.

The Office of the Registrar of Indigenous Corporations (ORIC) told National Indigenous Times that corporations should be aware ORIC would soon begin considering those corporations that should be deregistered or referred to the Commonwealth Director of Public Prosecutions for potential prosecution action if they were late lodging annual reports or did not adhere to governance structures and board arrangements as required by law.

"Corporations should also be aware that ORIC will soon begin considering those corporations that should be deregistered or referred to the Commonwealth Director of Public Prosecutions for potential prosecution action," a spokesperson said.

The ICAC survey also received submissions from suppliers who alleged contracts were "improperly awarded" and had hurt their businesses financially.

"As a result, suppliers laid off staff, moved their business interstate, and some small businesses dependent on government contracts closed," the report read.

"One supplier alleged that a procurement officer had intentionally disclosed confidential tender information to a competitor during the procurement process, in exchange for being given employment with the successful contractor."

The report, tabled in state parliament, made 18 recommendations to help public authorities prevent corruption in their procurement processes. It made three specific recommendations in relation to the practice of 'Black cladding':

1. Public authorities conduct regular procurement audits based on the risk profile of their procurement activities. High risk procurements may include those where the number of suppliers able to tender is limited, extensions or variations are utilised, an incumbent supplier has been reengaged, and those conducted with urgency or in emergencies. Procurements under $55,000 should be regularly audited for evidence of tender splitting.

2. Public authorities prevent non-Aboriginal suppliers taking unfair advantage of schemes intended to assist Aboriginal suppliers to win public sector contracts by verifying the status of suppliers claiming Aboriginal identity.

3. Where relevant, public authorities conduct random audits of contracts that are required to have a mandated proportion of labour force hours to be performed by nominated groups.16 Non-compliance needs to be reported to the Office of the Industry Advocate.

The full report is available online.