With the new NPC control feature anyone in a faction can take gear from any NPC. I'm not certain if this is was possible before with Squad drop all, but I thought some level of privileges was required to do so previously. Is this an initial part of the new feature? I just find it odd that hardened soldiers would allow anyone to strip them of all their gear regardless of who they are so long as they are in the same faction.
It should require an NPC management priv... assign NPCs seems most reasonable. I'll poke Lan to have a look at it and make sure and/or fix if necessary.
"On two occasions I have been asked,—"Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?" I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question."
- Charles Babbage
This may have simply been due to a Squad: drop all. I'm not 100% on this but since everything seems to be in order I assume if someone is pilot of NPCs then they can issue all available commands with no faction privileges. At the time of writing I was rather frustrated and neglected to think of the obvious answer.