Subscriber Discussion

Do You Regularly Require An NDA With New Clients?

When taking on a new client, do you ask them to sign a non-disclosure agreement? We are a full service integrator and design and install our own systems. We don't want competitors getting their hands on our designs and stealing them. We are up against one inept giant and one telephone system integrator on a large job. I don't want either to have any knowledge of our proposal.



The Integrator I worked for never did. It is just one of those chances we took. On the other hand some customers would only tell us that there were other players, some would give us the equipments list with prices whited out, and a very few would just send us the whole proposal. It wa always great when we got competitors information! In my humble opinion I think you would be worse off asking them to sign some type of NDA then not.

I'm semi-allergic to NDA's. Will only request/sign them under extreme circumstances in most cases. It's not a perfect indicator, but I've found that "NDA hyper" companies tend to be difficult to work with at all stages if they require a contract up front just to talk to you.

Sure, there are exceptions if you're negotiating the sale of a company, or some other very large event. But if you wanted/required an NDA just for a proposal, it would cause me to seriously question working with you.

An honest question for clarification (and one maybe you can't/won't answer), but what is it about your designs that you think is so truly unique that another similar integrator couldn't already come up with something similar? Do you require your customers to disallow any other integrator from servicing/supporting that designed system?

Jon, good question, this post addresses your question/concern: Stopping End Users From Shopping Quotes.

I am with Jason and Brian about not typically using NDAs. That said, as we discuss in the post referenced above, I do think it's a good idea to either get a verbal or written agreement not to share your quotes / proposals.

A lot of businesses fear the term 'NDA' because it exposes them to unknown legal risk (e.g., what exactly is covered under the NDA?). By contrast, if you include a line in the proposal (like "this proposal is for Company's X internal use only and may not be shared / redistributed without our express written consent"), I think that's a good balance between protecting your interest and minimizing the complexity of getting legal approval on an NDA contract.

These are some good points. I prefer to engage with an NDA as you are talking to your clients and potential clients about their security operations and vulnerabilities. If you turn the table, I am sure they would want their security operations and vulnerabilities protected as well. In my opinion it protects both parties and if you frame it up that this protects them also they may be more apt to engage in a NDA.

To get around a formal Non Disclosure Agreement when I was an Integrator I had a Terms & Conditions Clause attached to the bottom of my equipment list/pricing page that effectively stated that the "designs, drawings and equipment lists contained herein was proprietary and the intellectual property of [insert your company name here]. As such it should not be shared or published, in whole or in part with any party other than the person named on the quote without my express written consent".

For the most part it worked. I didn't ever hear about my quotes getting into my Competition's hands and I can actually recall where a couple of prospects I had done quotes for asked my permission to share my quotes. The answer was of course NO.

As a Manufacturer today I require NDA's for all Integrator Partners and End User Customers. No NDA, no quote, no negotiating. I justify the requirement as 'protection' for both parties that what we discuss and share amongst us is confidential and protected. I rarely have issues with getting NDAs signed.

Basically what I am concerned with is a trunk slammer coming in and taking what we are quoting, undercutting us by 5% and landing the deal with some fast talking. The types of systems we have been designing lately are honestly over the head of a trunk slammer. Heck, a local division of one of THE largest security integrators has fallen flat on their face on this project and is getting kicked off the site. The customer is turning to smaller local firms who have the ability to actually sell a soultion, vs selling some hardware.

This particular client needs cameras for multiple sites fed to their headquarters location for oversight. They have limited bandwidth restrictions coming in the building. Their current IP / VMS solution is only getting them 1 FPS per camera at best, and they have only implemented the first two branch sites so far. The VMS / NVR that is being used is clunky, overpriced, and hard to use. They were sold "HD" IP cameras, but received 480P cameras for all the outdoor locations. To say that this national integrator failed miserably is understating it. They have been trying to get this working for almost TWO YEARS! The client has yet to pay anything to this day.

So, my main concern is we have proposed a unique solution that is also affordable and I don't want a copy cat coming along and reaping the bennefits of my hard work and research. If they happen to provide their own solution that the client prefers, so be it.

There is one statement in your last post that concerns me and should concern you:

Following "They have been trying to get this working for almost TWO YEARS!" you proceed to state: "The client has yet to pay anything to this day." YET TO PAY ANYTHING?

YES! - YOU SHOULD GET AN NDA ON THIS ONE FOR THIS CUSTOMER. Whether you do or not for your other customers proceed with caution with this one. Also, try to get some sort of consulting fee while your are at it if you are resolving things that have been out there for 2 years. ESPECIALLY if this customer truly has not paid anything.

Oh, and to answer your question - NO, we typically do NOT get NDAs from our customers. HOWEVER, we DO HAVE A CONFIDENTIALITY DISCLAIMER on all information sent to the customer.

Let me clear up the "haven't paid yet" with some more info. They are supposed to be leasing the system from the integrator, but since it has never been fully installed, the lease term has yet to begin. The integrator has been working on this for two years and have implemented many various systems. They (integrator) have also called in the manufacturer for assistance, but the best they could get was a lousy 1 FPS for about 6 cameras. It is really pitiful honestly.