Blackwater's work escorting U.S. diplomats outside the protected Green Zone in Baghdad expires in May, one official said Wednesday, and other officials told The Associated Press they expect the North Carolina company will not continue to work for the embassy after that.
It is likely that Blackwater will not compete to keep the job, one official said. Blackwater probably will not be fired outright or even "eased out," the official added, but there is a mutual feeling that the Sept. 16 shooting deaths mean the company cannot continue in its current role.
State Department officials spoke on condition of anonymity because Secretary of State Condoleezza Rice has not yet considered results of an internal review of Blackwater and the other two companies that protect diplomats in Iraq.
Department officials said no decisions have been made and that Rice has the final say.
They gave admiring appraisals of Blackwater's work overall, noting that no diplomats have died while riding in Blackwater's heavily armed convoys.
President George W. Bush did not directly answer a question Wednesday about whether he was satisfied with the performance of security contractors.
"I will be anxious to see the analysis of their performance," Mr. Bush said at a news conference. "There's a lot of studying going on, both inside Iraq and out, as to whether or not people violated rules of engagement. I will tell you, though, that a firm like Blackwater provides a valuable service. They protect people's lives, and I appreciate the sacrifice and the service that the Blackwater employees have made."
A panel that Rice appointed to review the contractors will report to her as soon as Friday, and Rice's announcement of what to do next probably will follow quickly, one department official said.
A transition from Blackwater would take time.
The company employs more people and has more equipment than its two competitors in Iraq. Any outside company that might replace Blackwater would have to provide trained U.S. citizens, with security clearances. That may mean that if Blackwater leaves, competitors hired some of its workers.
Blackwater spokeswoman Anne Tyrrell said, "We will follow the lead of our client. If they want us to stay we will stay. If they want us to leave we will do so."
The team of State Department management experts and outside specialists is expected to recommend greater oversight of security contractors and better coordination of their work with military forces, two officials said.
It is practically impossible to eliminate private security contractors altogether in Iraq because there are not enough department security agents to fill the gap, officials said.
Blackwater and two other contractors share a $571 million annual contract to protect diplomats and others in Iraq, Afghanistan, Israel and other countries. The Iraq share of the contract accounts for about $520 million, although not all goes to Blackwater.
The review also looked at the rules of engagement for department escorts and whether there is anything unique to Blackwater's training, operations and corporate culture that made mistakes in judgment or civilian deaths more likely.
It is not clear whether the review will extend to consideration of an idea floated by Defense Secretary Robert Gates to consolidate management of security contractors that work in Iraq for numerous U.S. government agencies, including the Pentagon and State Department.
Gates discussed the idea with Rice during a joint meeting last week in Moscow, a State Department official said.
Pentagon press secretary Geoff Morrell said Gates thinks "it is worth exploring" whether one chain of command should oversee all private security contractors in Iraq. Morrell said it would be going too far to say that Gates is advocating this approach.
In the Sept. 16 incident, Iraqi officials say Blackwater guards opened fire without provocation in Baghdad's Nisoor Square and killed 17 Iraqi citizens.
Iraq's government is demanding $8 million compensation for each
of the 17 people reportedly killed.
The Iraqi government is demanding that Blackwater be expelled from the country within six months.
In other developments: