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And another basis for my reasoning was that in 1990 on our ship there were 2 officers that were actually being discharged because they had not moved up in rank in 4 years (1 was a LTJG the other was a LT).
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Yes it is Navy policy, accross the board on military services I believe that you are given so many years to advance in rank. If you dont make the advancement you are discharged. But you never lose your commission until age 60. Every single officer is commissioned by the President, and only he can discharge you of it early (handicaped personnel not included).