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I recently started working for Company A. One of Company A's suppliers (Company B) employed me for about 5 years but suddenly laid me off around the beginning of this year; my position was eliminated due to a top-level corporate decision.

Based on what I learned about their business in the time that I was there, I know that Company B has some very serious problems with their design processes, how they handle quality issues, and their ability to meet quantity and timing commitments for manufacturing, among other things. To be blunt, I would be very surprised if Company B still exists in 5 years.

Part of my new role at Company A is providing input on which suppliers' parts we use when designing new products. My new colleagues at Company A are not aware of the problems Company B is having.

Knowing what I do, I don't think Company A should be using Company B's parts in any new products we design. Failing that, I think we should at least scale back on using Company B's parts. If we don't, I believe it could cost Company A a lot of money in scrap costs and lost business.

As an employee of Company A, I'm obligated to look out for the best interests of Company A. Given the responsibilities of my position, I feel this means I should speak up about the risks involved with designing new products that have Company B's parts in them. However, I'm also obligated to abide by the various confidentiality agreements I had to sign at Company B while I was working there. Many of the things I found at Company B that are cause for concern are covered by those agreements.

What should I do in this situation?

  • 1
    What jurisdiction are you in? Can you state the fact that there is a confidentiality agreement in place? If so, would it be possible to go to your current boss, give a negative recommendation and when asked reasons state that they are covered by an NDA? Have you discussed the exact terms of the NDA with a lawyer? – user1666620 Jun 12 '18 at 9:16
  • Would you feel adverse to advising against it as a former employee without giving any details as to why, and then leaving the decision up to a superior? – さりげない告白 Jun 12 '18 at 9:18
  • I'm in the US, specifically in Michigan. I haven't reviewed the terms of my NDA with a lawyer, so I'm not sure I can even say anything without breaching the agreement. I know that "consult a lawyer" is a common response on workplace.SE, so my question is predicated on the assumption that saying anything at all about the situation is at least nominally legal. – PolskiPhysics Jun 12 '18 at 9:32
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    @PolskiPhysics, Dig for public information regarding Company's B incompetence. I am not a lawyer, but I would think that anything public that you can find shouldn't fall under Company B's NDA. But also, don't underestimate the incompetence of other potential suppliers that you'd use instead of Company B. – Stephan Branczyk Jun 12 '18 at 11:00
  • Do you have any QA in place in company A where the supplied parts from company B fails any tests? – Sebastien DErrico Jun 12 '18 at 14:05
15

Ouch.. you're really between a rock and a hard place here.

Firstly you must respect any confidentiality agreements that are still in force from Company B as from a pragmatic point of view this is the area that could most directly come back to bite you. "We lost $X thousand/million/whatever worth of revenue because you broken confidentiality and torpedoed our relationship with Company A" is something that would probably get a lot of companies dialling for their lawyer's number pretty sharpish - especially if their position is a precarious as you believe. NDA's are serious business in this sort of scenario.

This is not however to say that there is nothing you can do about it. You mention that you are aware of quality and design issues in some of B's products, and that part of your new role is to provide feedback on those parts. Are any of the flaws that you are aware of something you could "find" when examining or evaluating B's products? If so get your hands on some samples, evaluate them (knowing what to look for) and then feed back appropriately to your colleagues at A. This way your foreknowledge becomes irrelevent to the results - you've "discovered" the flaws as a legitimate part of your employment at A and no confidentiality has been breached.

You can also say a great deal with what you don't say and how you don't say it. If a colleage at A asks about B's ability to meet commitments or deadlines etc you can say.

I can't comment on that due to an NDA I have with B

NDAs and confidentiality clauses are there to prevent information getting out that could harm the company if it did, no company in the world is going to beat you down with such an agreement for saying nice things about their performance. Therefore if the person who is asking you the question has been in the world of business for more than 5 minutes they will know that the only reason you are invoking the NDA is because the answer is not complimentary about B and they can draw their own conclusions from there. Sure they might not know exactly what the issue is but they know that there almost certainly is one and that's likely to make them cautious at the very least. All while you are meeting your responsibilities to both parties without exposing yourself to any legal risk.

  • On the other hand, the OP does not mention an NDA. – Jon Custer Jun 12 '18 at 14:21
  • @JonCuster He referred to it in a comment earlier. To be honest though if it's a confidentiality clause rather than a separate NDA it doesn't really make a difference - just sub in the appropriate term – motosubatsu Jun 12 '18 at 15:21
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I don't think you should use your past working experience to single out this company. Why?

  1. All the other suppliers could be as bad or worse or they could all be better. Who knows? See below.
  2. You potentially have an NDA issue
  3. It could be seen as biased in an unfavorable way

What should be done: start or enforce a quality initiative.

  1. Don't have a single supplier for any part.
  2. Internally QA new shipments or parts and track the quality per part/per supplier as well as the supplier reliability.
  3. You know what quality problems you old employer had. Make sure these issues are tested on all parts from all suppliers where relevant.
  4. Reward good suppliers with increased percentages of purchases and punish for poor quality.

Decisions should be made off data in my opinion. If you don't have data, make data.

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    +1 It could be seen as biased in an unfavorable way – Sebastien DErrico Jun 12 '18 at 15:34
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Building on @motosubatsu 's excellent answer, presumably you wouldn't want to buy parts not only from A, but also from any other company with the kinds of issues A has.

Your present company should have some kind of criteria for key suppliers - a form of internal due diligence before you source important products from anyone, to check you're happy with having them as a supplier.

This is the key to your easiest solution.

If you don't have such a system, at least for important purchases like this, then you probably should. You can cobble together some concerns that may exist for any key supplier, and state that you are aware of others, would your present company be OK with you putting together a tentative list of criteria of this kind.

You can point out the "what if" concern - there have been enough major company failures/takeovers that you may need to be sure that for some things, B won't be screwed over if a product/service/supplier that B relies on, abruptly ceases. That's a legitimate and indeed important business matter anyway, and doesn't in any way cause an NDA issue for you.

From your knowledge, you can make sure the kinds of issues you feel are a concern with A, are included on the list. Again that's not an NDA issue. You can list things like cash balances, gearing (cash/debt), company ownership, owner's previous handling of their businesses and owner's own business situation, shareholder/investment sentiment, management ability, customer feedback, product issue responsiveness, evidence of quality issues/quality control/acceptable levels, experience within B of company, indicators of improving/deteriorating situation, credit+payment terms offered, or anything else.

None of this implicates the NDA or company A. But you may well be able to ensure that these criteria cover your concerns with A, and anything else that could be found of concern with A from industry info, online research/feedback, or knowledge of others in B. Having worked at A, you already know what questions would be legitimate for any supplier, but would reveal issues with A if probed. You can ensure those are included in the list of criteria.

So now you have a list of criteria for suppliers, and that list is well placed for A to appear prominently as a concern on the list. You don't need to disclose your knowledge, and in true stealthily form, you should probably arrange for someone else to "discover" any points about A, citing your past employment as grounds not to comment.

You could even suggest the colleague can comment to the effect that "X, a colleague who worked at A, stated he was not willing to state whether or not A's internal operations would meet this standard, due to an NDA. This has to raise a risk of concern, and we should consider looking closer at A to confirm how it meets these criteria, before our acceptable suppliers/backup suppliers list is finalised." As @motosubatsu observes, a pointed refusal to comment doesn't breach an NDA.

Alternatively it may be that you can point documented feedback, concerns of others at B, or other online/recorded info about A, to someone else, and then your hand isn't anywhere near the matter. As long as your personal knowledge isn't directly evident, then influencing the points on the list, or nudging others to check specifics and reach any realisations, should keep you clean of any legal headache.

Even if A complains, it will be clear to them or to any court (if they go that far!) that its not due to breach of NDA, but just down to looking bad/risky in a list of supplier criteria in which all crucial suppliers were assessed on the same criteria. It "just happened" that A looked to be highlighted under several concerns when the answers were crunched, and that the reasons are matters of other people's comments and judgements (not yours), and completely legitimate business/product criteria that unfortunately A scored concerns about (but nothing to do with the NDA)

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