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Vendor Management Policy

Policy Status: Active

This policy is currently active.

Purpose

To manage risks associated with third-party vendors and ensure alignment with Acme Corp's security, privacy, and operational standards throughout the vendor lifecycle.

Scope

This policy covers all technology vendors that provide products, services, or solutions to Acme Corp, including SaaS applications, infrastructure providers, consulting services, and any vendor with access to Acme Corp data or systems.

Policy Statement

Vendor Assessment

Pre-Engagement Evaluation: - Security and privacy assessment before engagement - Compliance with HIPAA and other applicable regulations - Financial stability and business continuity capabilities - References and reputation check - Technical capabilities and integration requirements

Risk Classification: - Critical: Access to PHI or critical systems (highest scrutiny) - High: Access to internal systems or confidential data - Medium: Limited access or low-risk services - Low: No access to systems or data

Due Diligence Requirements: - SOC 2 Type II report (within last 12 months) for critical/high vendors - HIPAA compliance documentation and willingness to sign BAA - Security questionnaire completion - Penetration test results or security certification - Data handling and privacy practices review - Insurance coverage verification (cyber liability, E&O)

Contract Requirements

Standard Contract Provisions: - Confidentiality and non-disclosure obligations - Data protection and privacy commitments - Security requirements and controls - Right to audit vendor practices - Incident notification requirements (within 24 hours) - Service level agreements (SLAs) with penalties - Termination clauses and data return procedures - Liability and indemnification provisions

HIPAA Business Associate Agreement (BAA): - Required for all vendors with access to PHI - Covers permitted uses and disclosures - Safeguards requirements - Breach notification obligations - Subcontractor provisions - Termination and data return - Must be signed before PHI access

Data Processing Agreements: - Define data ownership - Specify allowed data processing activities - Require data encryption and security - Prohibit unauthorized data sharing - Address data retention and deletion - Include data subject rights (if applicable)

Ongoing Monitoring

Performance Reviews: - Quarterly reviews for critical vendors - Annual reviews for high/medium vendors - SLA compliance tracking - Issue and escalation tracking - User satisfaction feedback

Security Reviews: - Annual SOC 2 report review - Security questionnaire updates annually - Vulnerability disclosure review - Incident and breach monitoring - Access recertification quarterly

Compliance Monitoring: - Verify continued regulatory compliance - Review audit reports and certifications - Monitor for security incidents or breaches - Validate privacy practices - Check for material business changes

Data Sharing

Data Minimization: - Share only data necessary for vendor to perform services - Document justification for data sharing - Implement technical controls to limit data access - Regular review of data shared with vendors

Data Protection Requirements: - Encryption in transit and at rest - Access controls and authentication - Audit logging of data access - Data segregation from other customers - Secure data deletion upon termination

Data Location and Transfer: - Document where data is stored and processed - Ensure compliance with data residency requirements - Restrict international data transfers - Validate subcontractor locations

Roles and Responsibilities

Role Responsibility
IT Team Evaluate technical capabilities, assess security, integrate vendor solutions, monitor performance
Procurement Negotiate contracts, manage vendor relationships, track renewals, coordinate evaluations
Compliance Team Assess regulatory compliance, review contracts, require BAAs, conduct audits
Legal Review and approve contracts, ensure legal protections, manage disputes
Finance Evaluate financial viability, manage payments, track spending
Vendor Comply with Acme Corp's security and data handling standards, maintain certifications, report incidents

Procedures

1. Vendor Selection

  1. Business owner submits vendor request with requirements
  2. IT and Procurement identify potential vendors
  3. Request and review vendor documentation (SOC 2, security policies, etc.)
  4. Complete risk assessment
  5. Evaluate proposals and conduct demos
  6. Check references
  7. Select vendor based on evaluation criteria

2. Contract Negotiation

  1. Procurement leads contract negotiation
  2. Legal reviews contract terms
  3. Ensure required provisions included (security, privacy, SLA, BAA)
  4. IT validates technical requirements
  5. Compliance approves data handling provisions
  6. Executive approval for contracts above threshold
  7. Contract signed and stored in repository

3. Vendor Onboarding

  1. Provision vendor access per least privilege principle
  2. Configure integrations and technical setup
  3. Conduct security configuration review
  4. Document vendor in vendor inventory
  5. Schedule first performance review
  6. Communicate to relevant stakeholders

4. Ongoing Management

  1. Monitor SLA performance
  2. Track and resolve issues
  3. Conduct scheduled reviews
  4. Update risk assessment annually
  5. Renew certifications and contracts
  6. Adjust vendor relationship as needed

5. Vendor Offboarding

  1. Provide contract termination notice per terms
  2. Request return or destruction of all Acme Corp data
  3. Revoke all system access
  4. Retrieve company assets
  5. Obtain certification of data deletion
  6. Update vendor inventory
  7. Conduct lessons learned review

Exceptions

  • Emergency procurement may have expedited review process
  • Low-risk vendors may have reduced assessment requirements
  • Sole-source vendors may have limited negotiation leverage
  • All exceptions require documented risk acceptance
  • CTO approval required for exceptions to security requirements

Compliance and Enforcement

  • Vendor Inventory: Maintain complete inventory of all vendors with data access
  • Risk Assessment: All critical vendors assessed annually
  • Contract Compliance: Monitor vendor adherence to contract terms
  • BAA Coverage: 100% of vendors with PHI access have signed BAA
  • Audit Rights: Exercise audit rights for high-risk vendors
  • Vendor Performance: Vendors not meeting SLAs subject to remediation or termination
  • Non-Compliant Vendors: Access revoked for vendors failing to maintain compliance

References

  • HIPAA Business Associate Requirements (45 CFR § 164.502(e), § 164.504(e))
  • HIPAA Breach Notification Rule (45 CFR §§ 164.400-414)
  • SOC 2 Trust Service Criteria - Vendor Management
  • NIST SP 800-161: Cyber Supply Chain Risk Management
  • Shared Assessments SIG (Standardized Information Gathering)

Revision History

Version Date Author Changes
1.0 2025-11-08 IT & Procurement Team Initial version migrated from Notion

Document Control - Classification: Internal/Confidential - Distribution: IT, Procurement, Compliance, Legal, Finance teams - Storage: GitHub repository - policy-repository