Overview
Evaluating vendors and suppliers often requires sharing sensitive information about your requirements, technical environment, and business processes. At the same time, vendors may share proprietary methodologies, pricing models, or technical specifications during their proposals.
The key question is whether you need a one-way NDA (protecting just your information) or a mutual NDA (protecting both parties). This guide helps you decide and implement the right approach.
Mutual vs. One-Way: Decision Framework
Which NDA Type Do You Need?
Use One-Way NDA (You Disclose)
You're sharing requirements and specs; vendor responds with standard pricing and capabilities without revealing trade secrets.
Use Mutual NDA
Both parties share sensitive information - you share requirements, vendor shares proprietary technology, custom pricing, or implementation methodologies.
Use One-Way NDA (Vendor Discloses)
Vendor is demonstrating proprietary technology or sharing trade secrets; you're only providing general, non-confidential context.
Factors to Consider
| Factor | One-Way | Mutual |
|---|---|---|
| RFP with confidential requirements | You disclose only | If vendor shares proprietary response |
| Technical demo of vendor product | Vendor discloses only | If you share integration requirements |
| Pricing negotiation | Rarely appropriate | Almost always mutual |
| Reference architecture review | Depends on who's sharing | Usually both share |
| Proof of concept | Rarely appropriate | Almost always mutual |
💡 When in Doubt, Go Mutual
Mutual NDAs are rarely objectionable to either party. If there's any chance the vendor will share proprietary information, start with a mutual agreement to avoid renegotiation later.
Protecting Your RFPs and Requirements
Request for Proposal (RFP) documents often contain sensitive business information that could benefit competitors or harm your negotiating position if disclosed.
What to Protect in RFPs
📈 Budget Information
Price targets, budget allocations, cost constraints, and financial parameters
💻 Technical Architecture
System diagrams, integration requirements, security configurations, and data flows
📅 Timeline & Strategy
Implementation timelines, go-live dates, migration plans, and strategic priorities
👥 User Data
User counts, transaction volumes, data sizes, and growth projections
RFP Confidentiality Options
- Separate NDA first: Require signed NDA before sending detailed RFP
- Built-in confidentiality: Include binding confidentiality terms in RFP cover letter
- Tiered disclosure: Public RFP for initial interest; detailed specs only after NDA
- Click-through agreement: For online RFP portals, require acceptance before download
⚠ Common Mistake
Many companies mark RFPs "Confidential" but never obtain actual confidentiality agreements. A stamp or watermark alone does not create legal obligations. You need a signed agreement.
Common Vendor Evaluation Scenarios
Evaluating SaaS or on-premise software solutions. You share requirements and data samples; vendor demonstrates product and may share roadmap information.
Recommendation: Mutual NDASourcing components or manufacturing services. You share product designs and specifications; supplier may share proprietary processes or pricing models.
Recommendation: Mutual NDA with IP protectionsSelecting professional services firms. You share project scope and business context; consultants may share proprietary methodologies in proposals.
Recommendation: One-way NDA (you disclose) or MutualEvaluating hosting, cloud, or infrastructure services. You share architecture and compliance requirements; provider shares service configurations and pricing.
Recommendation: Mutual NDAYour Obligations to Vendors
When vendors share confidential information during evaluations, you have corresponding obligations even if you're the customer.
What You Cannot Do
- Share pricing: Don't disclose Vendor A's pricing to Vendor B during negotiations
- Reveal proposals: Don't show one vendor's technical approach to competitors
- Replicate methods: Don't copy proprietary methodologies you learned during demos
- Share internally without limits: Keep vendor information to the evaluation team
What You Can Do
- Compare internally: Your team can compare proposals to make decisions
- Share with advisors: Typically, you can share with attorneys and consultants helping with selection
- Negotiate price: You can tell vendors you have competitive offers without revealing specifics
- Use for reference: General knowledge gained is usually permissible (check residuals clause)
🔴 High-Risk Behavior
Never forward one vendor's proposal to another vendor. Even if you think it would help get a better deal, this is a clear breach that could result in legal liability and damage your reputation in the vendor community.
Key NDA Terms for Vendor Evaluations
Essential Vendor Evaluation NDA Terms
Terms to Watch
| Clause | Vendor Version | Your Preferred Version |
|---|---|---|
| Permitted Recipients | May limit to named individuals | Include evaluation team, advisors, consultants |
| Survival Period | May want 5+ years | 2-3 years is reasonable for evaluation info |
| Residuals | Vendor may want broad residuals | Acceptable for general knowledge; limit for trade secrets |
| Non-Solicitation | May try to include | Should not be in evaluation NDA |
Managing Multiple Vendor NDAs
When evaluating multiple vendors, you may end up with different NDA terms for each. Here's how to manage this efficiently.
Best Practices
- Start with your template: Propose your standard NDA to all vendors to maintain consistency
- Track variations: Maintain a spreadsheet of material differences in signed NDAs
- Brief the team: Ensure evaluators know the obligations for each vendor relationship
- Separate materials: Keep each vendor's confidential materials in separate, access-controlled locations
- Clean up after: Follow return/destroy obligations for vendors not selected
✓ Efficiency Tip
Include a confidentiality clause directly in your RFP that automatically binds all respondents. This reduces the need for individual NDA negotiations and ensures consistent terms across vendors.
Template Configuration
When generating an NDA for vendor evaluations, configure these settings.
| Setting | Recommended Value | Rationale |
|---|---|---|
| Type | Mutual (usually) or One-Way | Based on information flow analysis |
| Purpose | Evaluating potential business relationship | Limits use to evaluation only |
| Definition Style | Marked information + specific categories | Clear boundaries, practical for RFPs |
| Term | 1-2 years disclosure; 2-3 years survival | Reasonable for typical evaluations |
| Recipients | Employees, advisors, evaluation consultants | Practical for selection process |
| Residuals | Limited or excluded | Protects true trade secrets |
| Return/Destroy | Required upon request or decision not to proceed | Clean conclusion to evaluation |
Next Steps
- Determine NDA type: Assess whether you need mutual or one-way protection
- Prepare your template: Generate your standard vendor evaluation NDA
- Brief vendors: Send NDA before sharing detailed RFP materials
- Track obligations: Document what each vendor NDA requires
- Clean up: Follow return/destroy procedures after vendor selection
📝 Related Resources
NDA Negotiation Playbook - Handle vendor pushback on your NDA terms
Business Deal NDA Hub - Overview of all business deal NDA scenarios