Psychological Armor?

I'd like to hear from those of you who have a military background or expertise. What do you think of this?

Basically, when the US military was looking to outfit various vehicles with armor, it seems they tried to do so on the cheap. The writer had designed a lightweight but, he argues, effective form of armor that he called FLEA (Forward Light Escort, Armored). He submitted it for consideration when the military was in search of a contractor. Here is a key excerpt in a damning account:

After a month or so, I called TACOM and inquired as to the progress of the selection process. The officer said,"The FLEA yes, I have it here Oh, yeah this is armored. We don't want armor."

I knew the specification they wanted. The bodywork had to defeat the equivalent of a pellet fired from a pellet gun. Something like 19 grains at 435 feet per second. Something silly like that. I mentioned this to the officer."Yeah, right. We call it psychological armor'"

"'Psychological armor?'" I let that sink in to my brain."You mean, the guys just THINK they're sitting behind armor?"

He chuckled."Yeah, pretty much."

"But," I said,"I'm under the weight requirement even with the armor. Why not give them the protection?"

"That's not what we want."

So, credible? Not credible? If so why or why not? If true this seems scandalous, but there is also a hint of conspiracy mongering to it all, so I am awaiting feedback from those of you who know more about these things (if you are even reading during the summer lull). Lift your pint glass up in honor of Chris, one of my new Oxford buddies, for the source.