Originally Posted by MNC PJM

I am the MNC PJM
Wow... Didn't expect the response to go this way.

I am not from your company so I can only try to base your question on my limited experience to provide you with answers.

Based on your question, I summarize your problem as:
"Project Engineering function produced Test Tooling for Trial without Customer approval for Tooling"
I think it will be pertinent to ask yourself some questions first.

1. Is there a defined product development process?
* 1a. What is this PDP based on? What are the gates and deliverables defined in the process? Can you share?
* 1b. Do you have a Master Service Agreement with your customer (now ex customer) signed that also covers compensation in the case of project reversal? Where is this master service agreement located in the PDP?* How often do you review the relevance of the Master Service Agreement if you use a generic one?

2. Does your process clearly defines when tooling can be fabricated?
* 2a. Which gates must be bought off by your team before your tooling can gain clearance for fabrication?
* 2b. Who are the stakeholders for this gates clearance? Does it include engineering?

3. Where did Engineering get the budget to produce that first tool for trial?
* 3a. How did engineering get approval for this budget? (You need to really look into residual budgets left over from previous projects or existing budgets from other projects within the engineering department. Did they transfer money from other projects into this project?)
* 3b. Preparing tooling needs raw materials (How did it clear procurement without question? You need to escalate if there is no multi-parties in their approval documents and get quality and corporate compliance team to step in).

Maybe answering these questions can help to provide some answers to your problem.