Yes, you are right...but I also agree that now that he's spoken to the press, he'll get his $700. Government bureaucracy at its finest.
Something doesn't add up here...Before garnishment would occur there would be a quick investigation at his former command as to the disposition of the vest. On the DD-200 Survey form, the findings would be documented and he Commanding Officer makes a determination whether to "write off" the lost/damaged equipment or garnish the cost from the servicemember. What CO in his right mind would charge one of his wounded under these circumstances?