Have been told I can join the mercs but Lee won't let me - how do I join

Jarvis at the entrance of the new camp told me I can now join the mercs because I killed the minecrawler queen. Then talking to Lee - says how great it is that I killed the queen - but won't let me join. "It is not enough". Currently Lvl 14, should be enough. Next main quest is orc cemetary - do I have to finish this in my lousy bandit armor?

Or is this just a bug?