Some articles on this.
From this article (boldface mine):
The U.S. Department of Defense has approved of the armor because of its durability through battle after battle, especially in protecting against AK47 and hand grenades, which are traditional terrorist weapons.
"It's a special chemistry," said Michael Cooper, vice president and technical director. "There's not a commercial equivalent out there. If you had watched the war in Iraq in 1990, you would have seen Iraqi shells bouncing off these vehicles, not destroying them."
Clifton Steel is the only company providing the armor. Defense spending cutbacks in the late 1990s minimized competitors' production levels, forcing them to leave the market. Clifton Steel's armor production occurs at the its McKees Rock, Pa. plant outside Pittsburgh.
Because of its market niche and because the situation in Iraq has escalated, company employees have been working non-stop to fill military orders since October. Holidays and vacations have been deferred so the high production level can be maintained.
This is dated last March.
Another story on the subject can be found here. Note that this story is dated before the war started. A recent story from the same source can be found here.
An article on body armor can be found here. Dated December, 2003.
This is not a new issue, and the government has not failed to address it.
There is no real concern for the troops or real knowledge reflected in this news flap, any more than Abu Ghraib was about real concern for Iraqi prisoners.
It's a political weapon, and nothing more.