Well, as an engineer who has written my fair share of requirements documents used for legally binding contracts, I would say that your requirements are vague and ill defined. I mean, how big is the round hole compared to the square peg? What material is the hole in and what is the peg made of? What tooling is available for changing the size of either the hole or the peg and what are the cost projections for both non-refundable engineering and recurring manufacturing per unit? What constraints exist based on other project requirements? What regulatory certifications are necessary for product sale? Has legal reviewed this yet?
Obviously we need to secure a modest amount of funding from the customer for initial feasibility and R&D studies before we can even begin to talk about defining and quoting such a complicated project... $50,000, USD, should be enough, we'll get back to you in a month. :-)
Just another Perl hooker - My clients appreciate that I keep my code clean but my comments dirty.