NDA

Why an NDA matters during your RFP process

What is an NDA?

Every business has innovative ideas or projects in the works that they must protect from competitors. A non-disclosure agreement (NDA) is a legal document that does just that.

Ideally, the NDA is intended to prevent sensitive information from being leaked in the first place. But it’s also there to provide businesses with legal recourse should a signee violate the agreement.

These days, businesses use NDAs as part of pretty much every type of contract they enter into — including with external parties and employees. The RFP process (whereby businesses invite external vendors to bid on a particular project) is no different.

So if NDAs aren’t yet a part of your RFP process, they should be. Here’s why they matter.

5 reasons why NDAs are critical to your RFP process

1. Protect your confidential information

Given the purpose of RFPs is to solicit vendor bids for a specific project, it’s likely your RFP will include some confidential information that you don’t want to be revealed to the public or your competitors. NDAs for RFPs can protect a wide range of information, from processes and strategies to designs and corporate structure.

Including an NDA in the RFP process will allow you to explicitly state that any information revealed in your RFP cannot be shared by the bidding vendor with any other party.

5 reasons why NDAs are critical to your RFP process

2. Give yourself legal protection

Should a vendor breach that confidentiality, the NDA is there to give you legal protection and recourse. To become binding, NDAs need to explicitly state their purpose, duration, and people from both parties who can access your sensitive information. Be sure to have your in-house counsel or external legal team closely review (and possibly draft) your NDA before including it within your RFP.

3. Weed out the unqualified

Typically, any vendor who takes the time to complete the NDA in the RFP process will be serious about your project and will be qualified to provide you with the services you need. And the less unqualified bidders you attract, the less hassle you’ll have to deal with when it comes to evaluating bids.

4. Clarity during the contract phase

By clearly specifying what is allowable to share and what is not during the RFP process, an NDA helps to establish clarity between all involved parties. This clarity is especially important when it comes to the selection of your final vendor and will help you both avoid any unnecessary understandings during the final contract or negotiation phase.

5. Prevent collusive bidding or bid-rigging

Collusion or bid rigging between vendors is the dark side of the RFP process. Nobody wants to talk about it, but it can (and does) happen, especially for large contracts. While it’s difficult to legally prove collusion, an NDA is a good preventative measure that can legally bind parties from discussing their proposals.

Conclusion

NDAs are an important part of any company’s toolkit for protecting their confidential information. Given the sensitive information that’s usually shared during a bid process, businesses should definitely incorporate NDAs into their overall RFP process. Doing so may prove to be the difference between keeping their competitive edge and losing it to the highest bidder.