The Vendor Conflict Disclosure Letter
Ask Who Gets Paid Before Your IT Renewal
Send this disclosure letter 60 to 90 days before the decision, then file the written answers with the contract.
Your renewal file is missing the compensation record
The recommendation says to replace the firewall, renew the licenses, or move to a larger tier. Your contract file may show the price while leaving referral fees, resale margin, volume rebates, partner-tier benefits, and individual sales incentives blank.
Ask in writing. Complete answers let you weigh the recommendation before approval. A missing response stays open in the decision record.
Send the same letter to your current provider, every firm quoting the work, every independent adviser, and SBK.
Send it 60 to 90 days before the renewal decision
Send it in writing. Attach the letter to an email or place it on your letterhead. Keep the written response with the contract. If the provider asks for a call, take the call and request the final answers in writing.
Address it to a principal. Send the request to the provider’s owner, managing partner, or president. Ask the account manager to confirm receipt without making that person the final disclosure owner.
Use your decision calendar. Send the letter 60 to 90 days before renewal, at the start of the budget cycle, or during intake for a new relationship. Avoid the week before the deadline, when waiting can remove your options.
Give a deadline. Set a response date 10 to 15 business days after delivery. Keep unanswered fields open.
Send the same letter to everyone. Include the incumbent, each bidder, every independent adviser, and SBK. Compare the answers in the same approval record.
Name the decision. Put the renewal, quote, or budget approval in the subject line so the provider knows which record will hold the response.
Keep the response. File it with the contract and approval. Re-send annually because compensation arrangements, partner tiers, and ownership can change.
Copy the letter into your renewal record
Copy everything between the rules. Replace every bracketed field, enter the exact response deadline, and delete this instruction line before sending.
[Your organization letterhead]
[Date]
[Name]
[Title]
[Provider firm name]
[Address]
Re: Request for disclosure of vendor compensation and commercial relationships
Dear [Name],
We are conducting a review of the commercial arrangements behind the technology advice and products our organization receives. This is a governance exercise applied uniformly to every firm that advises us or sells to us, including firms we have worked with for years and firms we are currently evaluating. It is not a reflection on the quality of your work.
Our organization relies on your firm’s recommendations to make purchasing and architecture decisions. To weigh those recommendations properly, we need to understand what commercial interests, if any, are attached to them. We are asking for disclosure, not for changes to how your firm operates.
Please respond in writing to each of the eleven items below by [date, 10 to 15 business days out]. Where an item does not apply, please state that it does not apply rather than leaving it blank. Where an amount is variable, a range or a percentage is sufficient. Where you believe a specific figure is subject to a confidentiality obligation, please say so, identify the counterparty, and describe the arrangement in general terms.
A. Direct compensation
1. Does your firm receive referral fees, finder’s fees, commissions, or any other payment from a technology vendor, distributor, carrier, or service provider in connection with products or services recommended to us or purchased by us? For each such arrangement, please identify the vendor and the basis of the payment.
2. Does your firm receive rebates, back-end incentives, volume bonuses, growth accelerators, market development funds, or co-operative marketing funds from any vendor whose products we use or have been recommended? Please identify the vendors and describe how the amount is determined.
3. Does your firm hold a partner, reseller, or certification tier with any vendor whose products we use or have been recommended, where maintaining or advancing that tier depends on sales volume, revenue, or number of customers? Please identify each vendor, the tier, and the criteria.
B. Resale and margin
4. For each product, license, subscription, or hardware item we purchase through your firm, is your firm acting as a reseller, an agent, or a pass-through? Please list the items and state which category applies to each.
5. For each item identified in question 4 where your firm acts as a reseller or agent, what is the difference between the amount your firm pays the vendor or distributor and the amount we pay your firm? A percentage margin or a range is sufficient.
C. Credits, funds, and individual incentives
6. Does your firm receive implementation credits, deployment funds, migration funding, proof-of-concept funding, training vouchers, free licensing, or similar non-cash consideration from any vendor in connection with work performed for us? Please identify the vendor and the consideration.
7. Do any of your firm’s employees who advise us, including salespeople, account managers, engineers, or technicians, receive individual commissions, sales incentives, spiffs, or performance compensation tied to the products or services they recommend to us? Please describe the structure.
D. Ownership and affiliation
8. Does your firm, any of its owners, officers, or directors, or any affiliate, hold an ownership interest, equity stake, convertible instrument, or board seat in any technology vendor, distributor, or service provider whose products or services have been recommended to us?
9. Is your firm owned in whole or in part by a private equity firm, holding company, or parent organization that also holds an interest in any technology vendor, distributor, managed service provider, or software company whose products or services we use or have been recommended? Please identify the parent and any such interest.
E. Switching cost and exit
10. If our organization ended this relationship, please identify which of the following our organization owns outright and which would be lost, would require repurchase, or would need to be transferred with your firm’s cooperation: software licenses and subscriptions, cloud tenant administrative ownership, domain registrations, monitoring and management agents, backup data and backup infrastructure, documentation and network diagrams, credential and password records, ticket history, and any custom scripts or automation.
11. For each product or service purchased through your firm, please state the contract term, the renewal date, the notice period required to prevent automatic renewal, and any early termination charge. Please also state what transition assistance your firm would provide on termination and whether it is billable.
We appreciate a direct response. If any item is unclear, please tell us what you understood it to ask and answer that.
Sincerely,
[Name]
[Title]
[Organization]
[Phone]
[Email]
Put each written response in the scorecard
Score each of the eleven items independently. Fill this in while you read, before you form an overall impression.
| # | Item | Fully disclosed with specifics | Acknowledged without specifics | Declined to answer | No response | Notes |
|---|---|---|---|---|---|---|
| 1 | Referral fees and commissions | |||||
| 2 | Rebates and incentive funds | |||||
| 3 | Partner tier and volume criteria | |||||
| 4 | Reseller, agent, or pass-through | |||||
| 5 | Margin on resold items | |||||
| 6 | Vendor credits and funding | |||||
| 7 | Individual employee incentives | |||||
| 8 | Ownership interest in vendors | |||||
| 9 | Parent or investor overlap | |||||
| 10 | What we own on exit | |||||
| 11 | Terms, renewal, and exit cost |
Then answer the three questions that actually matter.
| Question | Answer |
|---|---|
| Of the recommendations we received in the last 12 months, how many involved a product on which this firm earns margin, a fee, or tier credit? | |
| Has this firm ever recommended that we keep what we have, spend less, or not buy something? Name a specific instance. | |
| If the answer to the previous question is that they have not, what would have to be true for that to be the right advice, and would we ever hear it? |
That second question is the whole test. A firm whose economics improve when you buy more will produce advice to buy more, and the advice may still be correct. The signal you are looking for is whether “do nothing” is ever in their vocabulary. If you cannot recall a single instance of your provider talking you out of a purchase, the incentive is doing the talking.
Read the response beside the recommendation and amount
Complete answers name the arrangement, amount or method, and affected recommendation
Itemized answers. Actual percentages or ranges on margin. Named vendors. A clear statement of which arrangements exist and which do not. Willingness to put it in writing without being asked twice. Occasionally, a firm will volunteer something you did not ask about, which is the strongest signal in the set.
A firm that discloses a 22% margin on hardware and a gold partner tier with a named vendor has not disqualified itself. It has told you the truth and given you a way to evaluate their next hardware recommendation. That is worth more than a firm claiming no conflicts.
Vague answers leave the compensation field open
Reassurance without figures. “We are vendor agnostic.” “Our partnerships never influence our recommendations.” “We always put the client first.” These are statements about intent. You asked about structure. Restate the question once and see what happens.
Answering some items fully and skipping others is informative. Note which ones got skipped. They are rarely random.
Refusal or evasion belongs beside the approval decision
- Refusal to answer in writing, combined with an offer to discuss by phone.
- “Our vendor agreements are confidential” applied to every item, including questions 10 and 11, which concern your own contract and cannot be confidential from you.
- Redirecting to the contract you already signed rather than answering.
- An unprompted price reduction, credit, or concession arriving with or shortly after the response. This is a bid to change the subject and it usually works.
- A sudden acceleration of a pending renewal or purchase.
- Escalation to a relationship argument. “After eight years I am surprised you would ask this.” The length of a relationship is not a disclosure.
- Silence. A firm that does not respond to a written governance request from a client has answered question 1 through 11 in a single stroke.
Use the disclosed payment to weigh the recommendation
An undisclosed conflict is the problem. A disclosed one is a fact you can work with. After you have the answers, three things change:
You can discount appropriately. A recommendation to replace a system carries more weight from a party who earns nothing on the replacement.
You can get a second read on the expensive ones. Not every recommendation. The ones above whatever threshold matters to your organization, and the ones where the recommended path happens to be the highest-margin path.
You can ask for the alternative. “What would you recommend if you earned nothing on this?” is a fair question to a firm that has just disclosed that they do earn something. Some will give you a genuinely different answer. That answer is valuable.
Send SBK the same disclosure request
SBK Consulting has no vendor partnerships, no reseller agreements, no referral fees, no commissions, and no resale margin. We have not had them since we started in 2010. We do not sell products, so there is nothing for a vendor to pay us for.
Our answers to items 1 through 9 are all “no arrangement exists.” Our answer to items 10 and 11 is that you own everything and there is nothing to transition back, because we never held it in the first place.
We are telling you that here so you can hold us to it. Send us the letter anyway. Any firm that asks you to run this test should be willing to sit for it.
Keep the disclosure with the signed decision
This letter is a template for a business governance request. It is general guidance and not legal advice. Nothing here creates a legal obligation on any provider to respond, and nothing here should be read as an allegation about any particular firm. If you are considering a contractual amendment, a termination, or a dispute, involve your counsel before you act on the response.
Adapt the wording freely. Delete items that do not apply to your situation. Add items your industry requires. The document is more useful to you edited than it is intact.
SBK Consulting is a family-run, vendor-neutral IT advisory firm serving the New York, Connecticut, and New Jersey metro area since 2010. We review completed disclosure responses before a renewal or a purchase if you want an independent read. If you use this letter and never call us, we consider it well spent.
(718) 407-4169