The Vault Dweller needs to go to Doc Morbid's hospital (an institution where they'll be "made useful" if you can't pay) and climb down the ladder into the doctor's basement. There the Vault Dweller will meet a mentally-challenged worker of diminished stature named Gretch, who will not so subtly let it slip that he's hard at work sorting out some human body parts to send to Iguana Bob in the Hub.
If the Vault Dweller confronts Doc Morbid over it, nothing will happen and they can't tell the authorities, leaving little opportunity for justice to be served. If the Vault Dweller kills Gretch, however, the Doctor and his two bodyguards, Flash and Cougar, will attack. No one will be bothered by their deaths, though.
The Vault Dweller then needs to go to the Hub and find Iguana Bob's stand Downtown. They need a high Speech skill to frighten him enough. Depending on their Barter skill, they can blackmail him for a large slice of his profits and then come back when they have a higher Barter skill to renegotiate. This number can go virtually unlimited bottle caps with lots of patience, but Reputation will plummet accordingly.
When the player is trying to blackmail Bob into paying him, one of the dialogue options is to say "Prime Choice Select is made of people!!!! It's made of people!!!" loudly. This is a reference to Charlton Heston's famous line from the film Soylent Green in which his character realizes a similarly morbid cannibalistic truth.