Suppliers quoting on a project deserve the courtesy of a response. Specify why they didn't get the business and thank them for taking the time to respond.
1234, Main Street
Boston, MA 02123
<Recipient Address Goes Here>
Thank you for submitting a <quotation/bid/proposal> on <name of project>. We're sorry to inform you that we have decided to go with someone else this time.
We appreciate the time it took for you to submit a <quotation/bid/proposal> and will keep you in mind for the future.
encl: <List of enclosed items goes here>