Not sure if errata are called for but certainly some sort of house rule. By comparison, the RAW makes a 50 calibre round from an M82A1 sniper rifle more powerful than a 25mm HE M2 Bradly chain gun round. Both have the same damage and crit value but the sniper rifle has armour modifier 0. The 25mm HE round does have blast power D but this would be completely stopped by the flak jacket even if we declared it an automatic hit for being a contact explosion rather than rolling 2d6.
Don't get me wrong, I like the system and most of the time it gives credible results, but I think an HE round from an M2 Bradley chain gun would go through a flak jacket like butter from the kinetic energy alone.
Well, here's the problem... if you hit someone square in the chest with a 25mm HE shell, while they're wearing a Flak vest, and you only roll one success... you do 1 damage, this is true. But the thing has a ROF of 4, meaning that unless they're deliberately just firing one shot, that's a skill die, ability die and 4 ammo die that all have to amount to just 1 success.
HOWEVER, you also have a blast value of D. This means that if you hit someone, not only does it do *that* damage, but it also does the blast damage. So, in this case you roll 2D6 with a base damage of 1 and +1 armour. Assuming you don't roll any 6's there, then sure, you've only done 1 damage. And you also have to roll separate hit location for that dice, so it would have to roll chest *again* to get the armour protection.
But that's one VERY lucky shot.
In addition to all that, the person hit (as well as anyone in the blast radius) is knocked prone and has to roll for suppression.
In general, though, I think you should determine things like "hit square in the chest" after you've rolled for damage.
Sure, the hit dice might have rolled chest, but that doesn't mean the hit must have been "square in the chest", it could have glanced the flak vest while detonating right behind the person. Or it might have been a dud (if no one else is in the blast zone, you can rule it like that).
I mean, you could say the same for a bolt action rifle hitting "square in the chest", but only rolling 1 hit and no more, doing just 3 damage... most likely not a killing shot (and not enough to do a critical injury). Would you still say that that shot hit "square in the chest" to your players?
Either way, it's not something that will be a common occurrance.
As for it doing more damage by kinetic energy alone, I think you're wrong.
HE rounds are, for all intents and purposes, hollow. And they tend to explode before the entire kinetic energy of the round is transferred to the target. So, for sure the target will be knocked down by the energy, but doesn't necessarily mean more than 1 damage. After all, most of the damage done by the weapon is from fragmentation, not the actual explosion.
EDIT: Add to all this the fact that additional *hits* on ammo dice can be used to score more than one hit on the target, to force more than one hit location dice meaning you increase the chance of not hitting the chest (or head, if you have a helmet too). And a hit on the arms or legs will do 4 damage + explosive damage (and more than one hit will do additional explosive damage, which also rolls a separate hit location dice), which is more than enough to do a crit since the crit value is 3. (and the crit value for the explosive damage is just 2, so if you hit the chest with the initial impact, but hit an arm or leg with the explosion and do 2 or more damage, you cause a crit anyway)
EDIT 2: Just for fun, I rolled this in the Foundry VTT a few times. First roll was a miss. Second roll had 1 hit and 1 ammo dice hit.
This I used to convert to 2 hits on the same target. This gave me a hit location of chest on the first hit (just like your example), doing only 1 damage. Blast roll gave me 0 hits, meaning the blast did no damage. Second hit impacted the head (and I pretended that the target also had a helmet), thus also only doing 1 damage (for a total of 2 to the target so far). Blast roll gave me 1 hit, meaning I do 2 damage. Hit location roll for the blast was arms, so no protection given. Total of 4 damage done to the target (I was using a Soviet soldier as the target and as the one operating the gun) leaving only 1 damage before being knocked out. Crit roll for the arms was high (9) giving a life threatening injury.
And that's all before any suppression rolls. And the character is knocked down prone.
So yeah... I'd still say that the 25mm gun is pretty lethal even if wearing a flak vest.
(If my target had been unarmored, they would have gotten 4 damage to the chest from the first shot, giving a crit, and 4 damage + 2 damage from the second shot, meaning 2 more crits. A crit to the chest, head and arms. From just 2 impacts. That's pretty damaging for a very low roll)