I believe there could some some grade inflation going on. That sounds like a "D-" or "F+" situation. You're talking about the far extreme left corner of the population bell curve, whereas the stated policy is all about the far right corner.

The B guy getting fired scenario would sound a lot like "he came in late once last quarter, he was responsible for one software bug (the A level guys are perfect of course), he didn't get awarded any honorary doctorates in CS last year unlike some of the A level guys (hey, Linus has a few), he claims to be publishing a textbook on the language we use but he's behind schedule, and he only taught his coworkers one new programming paradigm last year"