The amount of items that become ruined after some sort of interaction with either a player or environment is very unrealistic and annoying. If you take a shot in the upper back, it should only ruin/degrade items in the local vicinity (items only in the top one or two slots of your backpack, shirt etc). Currently, it seems taking one shot in the back will ruin 90% of items in your backpack, shirt, pants, etc. Certain items such as rags, clothing, food, or water should not be ruined from one bullet, rather slowly degraded by each shot.
These items will also become ruined by simply falling a short distance. Clothing should never be ruined by falling! Take a shirt and throw it out a window and inspect for damage, you'll find none.
Proposed solution: Localize the damage of shots by how they are arranged in that person's inventory. Certain items (rags, clothing, can openers, food etc) should receive the appropriate amount of damage for that given material. For example, a single M4 shot leaves a 5.56mm hole in a shirt, hardly enough to even warrant a worn condition.