The reason for choosing McDonnell over Grumman was the fact that Grumman was heavily loaded with Navy projects in the conceptual stage. It did not appear wise to select Grumman in view of its relatively tight manpower situation at the time, particularly since that situation might be reflected in a slow start on the capsule project regardless of priority. Moreover, serious disruption in scheduling Navy work might occur if the higher priority capsule project were awarded to Grumman.10NASA informed McDonnell on January 12 that it had been chosen the prime contractor for the Mercury spacecraft. Contract negotiations began immediately; after three more weeks of working out the legal and technical details, the stickiest of which was the fee, the corporation's founder and president, James S. McDonnell, Jr., signed on February 5, 1959, three originals of a contract.11 This document provided for an estimated cost of $18,300,000 and a fee of $1,150,000. At the time, it was a small part of McDonnell's business and a modest outlay of government funds, but it officially set in motion what eventually became one of the largest technical mobilizations in American peacetime history. Some 4,000 suppliers, including 596 direct subcontractors from 25 states and over 1500 second-tier subcontractors, soon came in to assist in the supply of parts for the capsule alone.12
The prime contract was incompletely entitled "Research and Development Contract for Designing and Furnishing Manned Satellite Capsule." The omission of an article before the word "manned" and the lack of the plural form for the word "capsule" prefigured what was to happen within the next five months. The original contract began evolving with the program, so that instead of 12 capsules of identical design, as first specified, 20 spacecraft, each individually designed for a specific mission and each only superficially like the others, were produced by McDonnell. Contract change proposals, or "CCPs," as they were  known, quickly grew into supplemental agreements that were to overshadow the prime contract itself.13
The relative roles of STG and McDonnell engineers in pushing the state of the art from design into construction are difficult to assess. Cross-fertilization of ideas and, after the contract was awarded, almost organically close teamwork in implementing them characterized the STG-McDonnell relationship. For a year before the company's selection as prime contractor, original design studies had been carried on with company funds. From a group of 12 engineers led by Raymond A. Pepping, Albert Utsch, Lawrence M. Weeks, and John F. Yardley in January 1958, the Advanced Design section at McDonnell grew to about 40 people by the time the company submitted its proposal to NASA. The proposal itself stated that the company already had invested 32 man-years of effort in the design for a manned satellite, and the elaborate three-volume prospectus amply substantiated the claim.14
In STG's 50-page set of final "Specifications for a Manned Space Capsule," drawn up in November, Faget and associates had described in remarkable detail their expectations of what the capsule and some 15 subsystems should be like. Now the McDonnell production engineers set about expanding the preliminary specifications, filling gaps in the basic design, preparing blueprints and specification control drawings, and retooling their factory for the translation of ideas into tangible hardware. Specification S-6 had enjoined the contractor to provide at his plant as soon as possible a mockup, or full-scale model made of plywood and cardboard, of the capsule system. With high expectations the Task Group awaited March 17, the date by which McDonnell had promised to have ready their detailed specifications and a dummy Mercury capsule and escape tower.15 But the debut was not to be achieved easily.
Before the company could finish building the mockup, at least two technical questions affecting the configuration had to be resolved: one was the type of heatshield to be used; the other was the exact design for the escape system. A third detail, the shape of the antenna canister and drogue chute housing atop the cylindrical afterbody, was also tentative when STG and McDonnell engineers began to work together officially on January 12, 1959.16
10 Glennan, "Statement of the Administrator on the Selection of McDonnell Aircraft Corporation to Design and Construct a Manned Satellite Capsule for Project Mercury," typescript, undated.
11 NASA Contract No. NAS 5-59, "Cost-Plus-A-Fixed-Fee Research and Development Contract for Designing and Furnishing Manned [sic] Satellite Capsule." This document is officially dated Feb. 13, 1959, the date on which it was approved by Glennan. For an elaborate 37-page report on the contract negotiations, see memo for files, Willis A. Simons and George F. MacDougall, Jr., "Procurement of Manned Satellite Capsule (Project Mercury) (Requisition S-6)," Feb. 9, 1959.
12 News release, "McDonnell Aircraft's Role as Prime Contractor for the Mercury Spacecraft," McDonnell Aircraft Corp., April 1962.
13 Ms., Stephen A. Armstrong for Project Mercury Technical History Program, "The History of Project Mercury Contracts," April 8, 1963; Armstrong, interview, Houston, June 4, 1964.
14 Manned Satellite Proposal, Vol. I: Management Proposal; Vol. II: Technical Proposal; Vol. III: Cost Proposal, Report 6483, McDonnell Aircraft Corp., Dec. 4, 1958.
15 Prepared by L. M. Parker and approved by John F. Yardley, E. M. Flesh, and Albert Utsch of McDonnell, "Project Mercury Capsule Detail Specification," Report 6603, was first issued on March 12, 1959, and revised on April 10 and July 15, 1959. By the latter date McDonnell model designation "133K" had been assigned the Mercury capsule, indicating 11 significant drawing changes so far. Cf. "Specifications for Manned Spacecraft Capsule," Specification No. S-6, item 184.108.40.206, STG/Langley Research Center, Nov. 14, 1958.
16 Low, "Status Report No. 4 - Project Mercury," Jan. 12, 1959. Evidence that the earlier NASA capsule design continued to compete with the McDonnell configuration is found in studies of drogue parachute effectiveness in stabilizing the capsule at subsonic speeds. See memo, James S. Bowman, "Transmittal of Project Mercury Data to the Space Task Group," June 3, 1959. The precise shape of the "coolie hat" blast shield was still debated in late 1960. See letter, Purser to Walter F. Burke, "Progress Report on pylon jettison rockets test at NASA," Sept. 21, 1960.