So this is a "how much information should I reveal when making a deal" type of question.
Obviously when one requires a service, one shops around to all of the different vendors that offer that service until they find the deal that will best fit their operation.
If a potential vendor asks what other options you're considering, it gives them a chance to compare themselves directly with their competition. You can also learn a little bit about how this company feels about its competition from the way this is handled.
Is there anything lost, or any downside to letting a potential vendor know which of its competitors you're considering?