Throughout 1959 and 1960, Mercury was the first and only approved American manned spaceflight program. Mercury was an engineering project. It's major goal was "to achieve at the earliest practicable date orbital flight and succesful recovery of a manned satellite". But it also excluded some promising alternatives, two of which took shape in NASA's 1960 budget. One was the so-called environmental satellite, a kind of small temporary space station.
On base of this idea McDonnell proposed this concept of 14-day space laboratory, using Agena B stage as 2nd stage of launch vehicle. For moving astronaut from Mercury to laboratory and back inflated access tunnel was used. Living space of space laboratory was planned to be 182 cu ft.