User privileges for documents in Projects

Sorry for the confusing title.....

We are using projects (especially bugs and document sharing) to collaborate between a few in house people and external contractors. I am about to add our offshore tooling supplier in, but would prefer limit their access to a given set of documents rather than allowing them access to everything. My question:

Is there any way of managing the document sharing within a project so that for instance I could have one group of users with access to a design folder (for instance) and another group with access to say an engineering folder, or are all documents available to anyone who has access at the project level??

I assume the 2 other options are:

set up different projects for "design" and "engineering" in the above example, OR
use Zoho docs as the document repository, which presumably gives better access controls for this type of requirement....but in this case I guess the integration is not as good and you have to leave Projects and go to Docs for this to work.

Would be interested in any feedback on the best way to achieve this. Thanks