vendor-selectionriskprocurement

Vendor Due Diligence Template: Questions to Ask AI, Cloud and Warehouse Automation Providers

UUnknown

2026-02-13

11 min read

A practical 2026 due-diligence questionnaire for AI, cloud and automation vendors — questions, scoring, red flags and contract clauses to reduce risk.

Hook: Stop guessing — ask the right questions before you sign with an AI, cloud or warehouse automation vendor

Choosing an automation, cloud, or AI provider in 2026 without a rigorous vendor due diligence process is an expensive liability. Operations leaders tell us the same four pain points: unclear security posture, unverifiable sovereignty claims, opaque outage histories, and SLAs that vanish when a failure hits. This template gives you the exact questions, scoring rubric, red flags, and contract language you'll use to vet vendors fast — with a downloadable questionnaire you can apply to AI, cloud and warehouse automation providers.

Why this matters now (2026 trends you must factor into due diligence)

Market conditions and regulation in late 2025–early 2026 changed the stakes:

Sovereignty-first cloud offerings: Major hyperscalers (for example, AWS’s 2026 European Sovereign Cloud launch) are building physically and legally isolated regions. That means vendors can claim "sovereignty" — but you must validate isolation, legal protections and independent controls.
AI governance and regulation: The EU AI Act, plus stricter procurement rules for government customers and FedRAMP-like approvals for AI platforms, require documented model governance, logging, and third-party audits.
Automation integration risk: Warehouse automation is moving from point solutions to integrated, data-driven systems. Integration complexity raises execution risk, spare-parts supply issues and single-point-of-failure exposure.
Supplier financial volatility: Recent M&A and restructurings (inspired by cases such as BigBear.ai’s strategic reset in 2025) highlight how compliance assets and debt profile changes can alter a vendor’s risk profile overnight.

How to use this article and the downloadable questionnaire

Start by running a desktop screen using the quick checklist below. For shortlisted vendors, use the full questionnaire (download link) during procurement RFP/RFI and vendor meetings. Each section includes:

Targeted questions to send to vendors
Documents to request
A simple scoring approach and red flags

Download the Vendor Due Diligence Questionnaire (PDF)

Quick screening checklist (use this in the first 48 hours)

Do they publish current security certifications (SOC 2, ISO 27001, FedRAMP, PCI, HIPAA)?
Can they show documented data residency and legal controls for sovereignty claims?
Do they provide an outage & incident report for the past 36 months?
Are SLA terms public and enforceable (credits, penalties, RTO/RPO)?
Do they supply audited financials (last 2 years) or a recent covenant summary?

The full vendor due diligence questionnaire (sections and sample questions)

Below are focused question sets you can copy into an RFI or share with a vendor. For each section we list the documents you should request and what to score.

1. Corporate & operational profile

Company legal name, registrations and subsidiary structure.
Ownership, investor cap table and any government-contracted subsidiaries.
Number of customers and top 10 customers by revenue (percent of revenue).
Primary contact for security, compliance and finance (name, role, contact).

Documents to request: incorporation docs, organizational chart, customer concentration report, SOC 1 consents.

Score: check for high customer concentration (>25% from one customer = elevated risk).

2. Security certifications & third-party audits

List all current certifications: SOC 2 Type II, ISO 27001, PCI-DSS, HIPAA, FedRAMP (including authorization level), CSA STAR—include issue and expiry dates.
Provide the latest third-party penetration test report and remediation timeline.
Do you run continuous external vulnerability scans? Provide recent summary results and exception list.
Describe encryption in transit and at rest (algorithms, key management, HSM usage).
Describe identity & access management: SSO support, MFA, least-privilege controls, segmentation between tenants.

Documents: certificates, SOC 2 report, pen test reports, bug-bounty program data.

Red flags: missing SOC 2 or stale ISO 27001; refusing to share pen test summaries; ambiguous encryption claims.

3. Sovereignty, data residency & legal protections

Where are production, backups, and logs physically and logically stored? Provide region-level details.
For any "sovereign cloud" claims, provide the legal model: separate legal entity, controlled infrastructure, and contractual sovereign assurances.
Who has administrative access? Are any admin functions performed across borders?
How do you comply with local data protection law (GDPR, Schrems II considerations, local access rules)?
Do you accept data processing agreements (DPA) with specific article mapping and SCC adoption?

Documents: data flow diagrams, DPAs, model clauses, independence attestations.

Score: validate geographic claims against independent controls and contracts. Review architecture and edge patterns like edge-first cloud architectures when assessing physical and logical storage boundaries.

4. Outage history, reliability metrics & incident response

Provide all major incidents and outages for the past 36 months with root cause analyses and corrective actions.
Provide your mean time to detect (MTTD) and mean time to repair/recover (MTTR) metrics per service.
What is your historical availability (monthly uptime %) for each critical service in the last 24 months?
Detail your incident notification process, SLAs for breach notification and customer communication templates.

Documents: incident reports, uptime reports, postmortems.

Red flags: missing postmortems, unexplained repeated outages in the same component, no notification SLA. See our suggested communications playbook for platform outages: playbook — what to do when major platforms go down.

5. Maintenance, upgrades & SLA terms

What are your scheduled maintenance windows? How are customers informed and how far in advance?
Provide RTO and RPO targets for the services used and define what triggers each.
Explain your change management and rollback procedures for major releases.
List SLA credit mechanisms, caps, and how credits are calculated/applied.

Documents: SLA template, maintenance calendar, change management policy.

Score: enforceable SLA credits and concrete RTO/RPO numbers are high-value. Ambiguous "best efforts" language is a red flag.

6. Financial stability & concentration risk

Provide audited financial statements for the last two fiscal years and the most recent interim statement.
List debt, major financing agreements, and any material contingent liabilities.
Disclose recent M&A activity, asset sales or changes in creditor status (e.g., debt elimination events).
What is your cash runway (months) under current burn rate and base-case churn?
Do you have business interruption or supplier default insurance? Provide policy limits and relevant endorsements.

Documents: audited financials, credit agreements, insurance certificates.

Case in point: when a vendor restructures or sells a compliance asset (as some firms did around 2025), the immediate compliance picture may improve — but buyers must still evaluate revenue concentration, government dependency and execution risk.

7. Automation- and hardware-specific questions (warehouse robotics, PLCs, edge devices)

List supported robot models, firmware versions and spare parts lead times.
Provide historical uptime for mechanical subsystems and mean time between failures (MTBF).
Who owns source code for integration layers and control logic? Is there escrow for source code or operational data?
Describe remote support capabilities, on-site technician SLAs, and training programs for local staff.
How do you secure edge devices and OT networks? Provide segmentation, patch cadence and physical tamper controls.

Documents: MTBF reports, spare parts agreements, service level staffing plans, code escrow agreements.

Red flags: single-supplier robotics without spare parts or source-code escrow; long parts lead times that exceed acceptable downtime windows.

8. AI-specific governance & model risk management

Provide model documentation: training data lineage, validation/performance metrics, drift detection methods and retraining cadence.
Do you maintain data provenance and model explainability artifacts? Provide examples (or sanitized summaries).
Describe your red-team/testing program, adversarial testing, and bias mitigation processes.
Who owns models and IP? Can models be locally deployed or sandboxed for offline evaluation?
What logging (input, output, decision metadata) is retained, for how long, and where?

Documents: model cards, validation reports, red-team summaries, retention policy. For metadata and provenance best practices, see automating metadata extraction with Gemini and Claude. For adversarial and detection tooling referenced in independent reviews, see open-source deepfake detection reviews.

Score: vendors that allow sandbox deployment, provide model cards and independent validation reports score higher for enterprise risk tolerance. Consider requiring on-device or local sandbox deployment where data residency is sensitive.

9. Legal, contract and exit planning

Do you accept mutual indemnification for security breaches and IP claims? Provide sample indemnity wording.
Do you offer data escrow, source-code escrow or a rollback plan if you cease operations?
Define termination-for-convenience and termination-for-cause provisions, including transition assistance and data return timelines.
Are there any export control, sanctions, or regulatory restrictions on service delivery?

Documents: master service agreement (MSA), DPA, escrow agreements, export compliance checklist.

Contract language to seek: explicit RTO/RPO obligations, SLA credits with monetary cap tied to fees, and escrow trigger events including insolvency.

How to evaluate responses — scoring and decision thresholds

Use a simple 0–3 scoring per question (0 = no evidence, 1 = partial, 2 = adequate, 3 = best practice). Weight categories according to your priorities. Example weights for commercial buyers:

Security & certifications: 25%
Sovereignty & legal protections: 20%
Outage history & SLA: 15%
Financial stability: 15%
Automation / AI specifics: 15%
Commercial & exit terms: 10%

Threshold guidance:

Score > 2.5 (weighted): low risk — proceed to contract negotiation.
Score 1.8–2.5: moderate risk — require remediation commitments or stronger contract protections (escrow, higher credits).
Score < 1.8: high risk — disqualify or require significant mitigations/incremental pilots.

Common red flags and quick mitigation steps

Red flag: refusal to share SOC 2 or pen test results. Mitigation: demand redacted summary or run your own independent test as contract condition.
Red flag: vague sovereignty claims without legal separation. Mitigation: contractually require DPA with clear data location guarantees and audits.
Red flag: repeated similar root causes for outages. Mitigation: require corrective action plan with timeline and penalties for missed milestones.
Red flag: negative cash runway or hidden debts. Mitigation: request escrow and extended transition assistance paid by vendor; consider parent-company guarantees.

Sample contract clauses and negotiation tactics

Include these priorities in your MSA and SOW:

Escrow clause: Source code and runbooks placed into escrow, with release triggers including vendor insolvency, sustained unavailability beyond X days, or failure to remediate safety-critical issues.
Enforceable SLA: Define RTO/RPO, measurement method, credits calculation and cap (e.g., service credits equal to a % of monthly fees per hour of downtime, with escalations and termination rights for repeated SLA misses).
Data residency & audit rights: Right to audit and on-site verification of data location and access logs; quarterly attestations for sovereignty claims.
Model governance addendum: Right to sandbox deployment, weekly model performance reports, and obligations for retraining if drift > threshold.
Insurance & indemnity: Minimum cyber liability limits (e.g., $10M+ for mid-market buyers), business interruption coverage and vendor responsibility for third-party claims.

Practical rollout: a 30–60–90 day vendor due diligence plan

Days 1–7: Run the quick screening checklist and request basic documents (certs, SOC 2, DPA).
Days 8–30: Send the full questionnaire to shortlisted vendors. Schedule technical deep-dive and legal call to clarify answers.
Days 31–60: Validate claims — request pen test redacted reports, run security review, check financials and request references from customers in similar verticals.
Days 61–90: Negotiate MSA clauses (escrow, SLA, indemnities), finalize SOW and plan a staged rollout with KPIs and pilot acceptance criteria.

Real-world lessons — inspired by recent market cases

"Acquiring compliance-certified platforms can reduce short-term risk — but buyers must still evaluate revenue concentration, government dependency and execution risk."

In late 2025, several providers reset stories after asset acquisitions and balance-sheet changes. A vendor that obtains a FedRAMP or other government credential may become attractive — but assess whether the company’s revenue base or customer mix has shifted toward a single market (government). That concentration can raise delivery and sustainability risk if the vendor pivots strategy.

Downloadable resources

Use our ready-to-send RFI and downloadable questionnaire to standardize diligence across AI, cloud and automation vendors. The package includes:

Editable RFI questionnaire (Word)
Scoring spreadsheet with weighted scoring
Contract clause bank (copy-paste language for MSA)
Vendor checklist (one-page) for procurement teams

Download the Vendor Due Diligence Package — copy, customize and share with suppliers.

Actionable takeaways

Don’t accept sovereignty claims at face value: require legal attestations and architectural evidence for geographic isolation.
Demand objective proof of security: SOC 2/ISO 27001 and redacted pen tests should be standard for production vendors.
Make SLAs enforceable: RTO/RPO, credit mechanics, and escrow are your primary risk mitigants.
Check financial health: audited statements, debt covenants and insurance policy limits inform your exit and contingency planning.
Test automation vendors on spare parts and support models: uptime is not just software — it's hardware logistics and local expertise.

Next steps and call-to-action

Start your diligence today: download the questionnaire, run the quick 48-hour screen, and invite shortlisted vendors to complete the full RFI. If you need a vetted provider shortlist or a tailored due diligence workshop for your procurement and legal teams, contact our marketplace curators — we verify providers against the checklist and provide comparison reports that save time and reduce risk.

Download the Vendor Due Diligence Questionnaire and run your first vendor through the scoring framework within 7 days. For hands-on help, request a vendor comparison and contract review from our team.

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