Do you think Body Fat Composition is an accurate assessment of your health?

The NavyTimes featured an article on a sailor who has had three failures for his physical fitness assessment due to body fat standards. This sailor consistently scored well on the excersize portion (sit-ups/push-ups/run) also getting very good evaluations and is a decorated 14 year sailor. He is being kicked out due to his body fat measurements. The Navy states a male should be under 22% body fat and a femal should be under 33%. To measure this, if you are over your height/weight limit you are taped (female) around your waist, neck and fattest part of your hips/butt. For males its neck and waist. They add our hip and waist measurement and subtract our neck measurement. Do you think this accurately tells how in-shape you are?