Interesting isn't it?
My background is in places where the challenge is more likely to be convincing the manager that they do actually need to go through a recruitment procedure of some sort even though they 'just know Betty from Marketing would be fab'
Again an exaggeration and a disservice to all the conscientious managers I've had the pleasure of working with.
My experience (which doesn't cover the public sector as you know) would tell me that if there is a good internal candidate who makes a bit of a balls-up of their application, but they are known to and liked by the recruiting managers, they'd be shortlisted anyway. The feedback would be 'disappointed with application, benefit of doubt, buck your ideas up for the interview'.
I'd expect that to be the case either if the format was not what was wanted (ie an essay instead of bullet points or whatever) or even if parachute jumping experience was not mentioned. Said managers would know about parachute jumping experience anyway so wouldn't want to cut off their noses to spite their faces by quibbling over it not being specifically mentioned.
That's not happened here. OP has been told her application was disappointing and that she hasn't been shortlisted. No benefit of doubt has been given. Based on what you're saying llareggub, even if the application was disappointing in terms of format, as long as parachute jumping and whatever else were fully covered, OP ought to have been shortlisted. But if parachute jumping were omitted, regardless of managers' prior knowledge of OP, they might not have felt able to shortlist her.
I have to say 'disappointed' does sort of imply that they couldn't for whatever reasons, and it's tricky to see a reason they couldn't other than omission of parachute jumping.
If there is a different reason, such as not wanting to lose OP from current job, I would have expected her to be shortlisted, to avoid any -ing, and then to be rejected on the basis of someone else performing better at interview, which is obviously much trickier to argue with as a candidate. I would also be surprised to hear that the manager is offering detailed feedback, and going through the application form. It does rather imply there is significant feedback to be given about the application form, ie something fairly fundamental wrong with it.
But chocpeanut is very certain she met all the criteria. It does seem strange from whichever point of view you're looking at it.