You have been put on the spot. You are an engineer in Purchasing. The head of your in-house shop has called to ask the prices obtained from outside suppliers bidding on a certain job. He wants those prices to help him prepare his own bid on the same job. Unless a company has been careful to make clear to everyone involved what the point of the new practice is and how it is supposed to work, certain misunderstandings are inevitable.
Outsiders are likely to worry about that too.
Generally, competition between inside and outside suppliers will benefit the company only if the competition is fair. If the insider has an inside track, outsiders will not take the trouble to bid. Preparing a bid costs money. Would-be suppliers are not likely to spend their money on preparing a bid unless they have a good chance of getting the contract. Once it is clear that inside suppliers have the inside track, an outside supplier has only two options, to charge for preparing its bid or to decline to bid.