Two-stage tendering is a way of buying construction work. The client appoints a contractor early, under a limited first-stage agreement, and the price for the works is agreed in a second stage. It is industry practice described in government guidance, not a procedure defined in the Procurement Act 2023.
How two-stage tendering works in construction
The guidance note calls the model Two Stage Open Book. A single contractor is appointed before all project information is complete. A limited first-stage appointment lets it support design, cost and risk development, and a fixed price or target cost is agreed at the end of the second stage. The first stage is commonly appointed using PPC2000, NEC4 ECI or a pre-construction services agreement (PCSA) (paragraph 4.2.1).
A buyer can award a PCSA for the early period only, with a separate construction tender, but the note says that can undermine the benefits of early involvement.
What government construction guidance says
The Construction Playbook (version 1.1, September 2022, page 28) says public works projects and programmes “should contract for early supply chain involvement (ESI)”. ESI extends early contractor involvement by formally engaging the Tier 1 contractor alongside Tier 2 and 3 subcontractors and suppliers. It adds that a further competition after ESI can undermine its benefits.
Scope. The guidance note applies to central government departments, their executive agencies and non-departmental public bodies. Other public bodies are “encouraged” to apply it (paragraph 1.2.1), so a council may or may not follow it.
Date. Both documents date from September 2022, before the Act replaced the 2015 regulations for new procurements on 24 February 2025 (PPN 019). Use them for the construction model, not for procedure names.
Two-stage tendering and the Procurement Act 2023
The Act does not define “two-stage tendering”. Its competitive tendering procedures are the open procedure and the competitive flexible procedure (s.20(2)), and a buyer must carry out one before awarding a public contract under section 19 (s.20(1)).
Watch the wording. gov.uk’s guidance uses “simple two-stage” for something different: a competitive flexible procedure that shortlists suppliers using conditions of participation, then invites the shortlist to tender, similar to the former restricted procedure (paragraphs 16(b) and 65). That is not the construction model above.
The guidance does not mention construction or early contractor involvement (checked 11 Oct 2026), so read the tender notice for the procedure and any stages (paragraphs 85 and 86).
What it means for a small supplier
In the guidance note’s model, the two-stage appointment is of a single main (Tier 1) contractor (paragraphs 1.1.4 and 4.2.1). The guidance note lists three ways to contract with Tier 2 and 3 firms: through the main contractor, joining agreements as part of a sub-alliance using FAC-1, or direct contracting under a construction management approach (paragraph 4.2.1(5)).
Check the notice for the stages and any requirements you would need at award, such as SSIP, CHAS and Constructionline. Then browse live construction tenders.
Next: how to read a tender notice.
Questions
What is a pre-construction services agreement (PCSA)?
The limited first-stage appointment in two-stage tendering. Government guidance says the first stage is commonly appointed using PPC2000, NEC4 ECI or a PCSA (guidance note, paragraph 4.2.1).
Is two-stage tendering allowed under the Procurement Act 2023?
The Act does not define it. A public buyer must carry out an open or competitive flexible procedure before awarding a public contract under section 19 (section 20). Read the tender notice for the procedure and stages.
Is a two-stage competitive flexible procedure the same thing?
No. In gov.uk's competitive tendering guidance it means shortlisting suppliers and then inviting them to tender (paragraphs 16(b) and 65), not appointing a contractor early.
Can a small firm take part in two-stage projects?
Possibly, through the supply chain. The guidance note lists three routes to contract with Tier 2 and 3 firms (paragraph 4.2.1(5)). It does not say how often this happens.