I can see both sides of this argument, and since I've never been in uniform myself, I wont pretend to know the inner workings of the military procurement procedure, however... It is pretty well known that the low bids get the contract, and thus one would assume that some quality will get sacrificed in order to lower costs. I don't see why a superior product (if indeed it is superior) would be denied to the troops if they are willing to pay for it themselves. It would be nice to see where this directive actually came from, and the real reasons for it instead of the speculation that is in the article.
I would definitely be dismayed if the only reason for this was DOD caving to pressure by the lobbyists for the company that makes the Interceptor body armor who want to curb the competition.
(this all made sense in my head before I posted it, maybe not so much once I put it in writing
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