How does Lt. Ferra's DOffs-for-Commendations system work?

How does Lt. Ferra's DOffs-for-Commendations system work? I can't make it out at all, except that it involves the commendation points that you get for DOff missions.
Do you swap one of your existing duty officers for a better one? If so, can you choose which one you swap? I've only got one pretty unreliable counsellor, for instance, so I'd be glad to swap one of my two or possibly three bartenders for a better one.
And does the type of commendation have the slightest thing to do with what kind of duty officer you can get for it (doesn't look like it)?

As you rank up your commendation levels you get free doffs, basically.

Click on the top left where it shows your rank, it'll bring up a window. Hit the commendation tab and it'll show you what rank you are in all the commendation categories (plus on the right what benefits each rank has).

Every time you rank up in a category you get a token (that doesn't exist in your inventory). You can then go to Ferra and select the "store" option and it'll bring up a store window with tabs for each commendation category.

Rank 1 & 2 gets you a free green. Rank 3 is a blue, rank 4 is a purple. Once you've spent your "freebie" for each category/rank, those doffs are then available for purchase for dil.

Oh, and those doffs are bound to you. You can't trade/sell them. You also can't use them in starbase projects. You can execute them (klingons) or use them for officer exchange assignments.