The dashed blue border lines are a hair smaller than the blue border on the Air Force logo overlay decal.
The underlay decal is sprayed with gloss white paint. This seals the surface, no clear coat is necessary for a water transfer.
Soak and transfer the white underlay decal.
You should still be able to see the dashed cut lines.
Cut out the white sprayed decals. Soak and transfer the white underlay decal.
I'm rolling a damp Q-tip over the paint thickness "decal" to smooth it out and remove excess water and air bubbles. Let dry.
The white decal on the model gets some water lightly rubbed on with a finger - leave wet. This water acts as a lubricant for the overlay positioning.
Soak and transfer the red and blue Air Force logo. In the right side picture it isn't in position yet.
After sliding around a bit, you can center and cover any white edges with the overlay decal. Use the rolled damp Q-tip again to smooth it out.
This white paint decal idea works well in some applications. It certainly looks better than the orange paint showing through the clear areas.