Engineers General confusion re: Engineers

OK, so what do I need to gather? Is that how it works, I bring them supplies for incremental progress on components? I'm kind of baffled by the Engineers in general.
 
Right?
Welcome to engineers.

Where you have to search the galaxy for these components instead of just purchasing them (some you can actually buy, however not from the engineer... that would make too much sense). And to kick you while you're down - what you get is a randomly generated product.
 
The upgrades aren't incremental. It makes no difference whether you go straight to a grade 5 upgrade or start at grade 1. Your reputation with the engineer is incremental though. Buying throwaway upgrades is the best way to gain this reputation.
 
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