Reading further into the story, it appears that if it had been properly documented, he would not have been charged for it. I guess they want the cost to serve as a deterrent for people walking off with the body armor after their stint in the service?
But no one documented that he lost his Kevlar body armor during battle, he said. No one wrote down that armor had apparently been incinerated as a biohazard.
However, surely they can confirm by talking to his unit, that he indeed lost his body armor like he claims he did and thereby waive this fee.