Following the STS-9 disaster and ensuing chaos within the agency, it became clear the shuttle program was not going to be long-lived. It looked like the space shuttle program might not even make it to the 90s.
In this chaos, several designs were studied for in-house replacements to the shuttle for both cargo and eventually crew missions.
Requests for designs went out.
Crewed spacecraft varied greatly from smaller spaceplanes to reusing apollo Hardware for capsules, which would ride atop an OMS pod derived service module. Even with the project being in its infancy, it was clear that development was not going to happen fast enough. Submitted designs kept "re inventing the space shuttle" when they'd try to replicate all the capabilities the shuttle has as DODIS had desired. Progress couldn't be made with this many requirements placed on one spacecraft.
For cargo payloads, the submissions were less competitive, and urgency was greater. The program had several important payloads it was expected to deploy in the coming years, including payloads to study Halley's comet and important DOD satilites.
DODIS ran through the submissions looking for existing production and quick development.
The selected design is referred to by DODIS (initially temporarily) as shuttle C.
Test orbiter enterprise was taken and modified for the first test launch. Her crew module was removed along with her wings, tail, and landing equipment. Avionics was moved into a new aerodynamic nose cone. As the new vehicle was entirely expendable, only 2 SSMEs were installed (even this number still being redundant with how much the payload mass had been reduced).
What DODIS had was a cheap to develop but prohibitively expensive entirely expendable launcher with a still terrible payload capacity.
When Enterprise was test launched and performed the first of (unknown to DODIS at the time), many Shuttle C flights they became stuck with it.
