Thank you very much for the proposal you submitted to us on __________, 20 __, in response to our request.
We are aware of the great deal of time and work that went into your bid and therefore, regret to inform you that we have awarded the contract to another firm. We based our decision on _______________.
(state the reason for rejecting the proposal)
We will certainly be inviting your firm to bid on our future projects and thank you once again for your proposal.