"I believe we acted appropriately at all times," Prince, a 38-year-old former Navy seal, told the House Oversight and Government Reform Committee.
In written testimony, Prince insisted that his guards opened fire only after being shot at, but he never got the chance to say that because it is now a criminal case, reports CBS News national security correspondent David Martin.
The State Department has asked the FBI "to take a fresh look" at the Sept. 16 shootings that left 11 Iraqis dead, reports CBS News correspondent Bob Orr. The team is comprised of eight FBI agents, all trained in evidence response. They depart Tuesday for Iraq and hope to wrap up their on-site investigation in a matter of days, not weeks.
But in Iraq, it has never mattered before, reports CBS News foreign correspondent Elizabeth Palmer.
There hasn't been a single prosecution of a foreign security contractor since the invasion. Early on, American officials gave them immunity from Iraqi justice. And U.S. legal experts can't agree on where, or even if, they can be prosecuted elsewhere, adds Palmer.
The Sept. 16 incident and others, including a shooting by a drunk Blackwater employee after a 2006 Christmas party, has raised pointed questions by lawmakers about whether the government is relying too heavily on private contractors who fall outside the scope of the military courts martial system.
"Privatizing is working exceptionally well for Blackwater," said Rep. Henry Waxman, D-Calif., committee chairman. "The question for this hearing is whether outsourcing to Blackwater is a good deal to the American taxpayer, whether it's a good deal for the military and whether it's serving our national interest in Iraq."
Waxman said he agreed not to probe for specifics of the Sept. 16 incident during Tuesday's hearing, upon request by the Justice Department that Congress wait until the FBI concludes its investigation. But Waxman said it was still appropriate to probe Blackwater's company policies, and whether the State Department helped Blackwater cover up Iraqi deaths.
In particular, Waxman said he was concerned to learn the State Department advised the company on how much to pay the family of an Iraqi security guard shot by a drunken Blackwater employee in 2006. Internal e-mails later revealed a debate within the State Department on the size of the payment, Waxman said.
"It's hard to read these e-mails and not come to the conclusion that the State Department is acting as Blackwater's enabler," Waxman said.
The House committee's report, prepared by the panel's Democratic majority staff, also said Blackwater has been involved in 195 shooting incidents since 2005.
In more than 80 percent of the incidents, called "escalation of force," Blackwater's guards fired the first shots even though the company's contract with the State Department calls for it to use defensive force only, it said.
Administration officials, speaking on condition of anonymity to describe an ongoing investigation, said the incident had been referred to federal prosecutors in Seattle, where the former Blackwater employee now lives, but there has been no public announcement of any charges.
Prince said the individual was immediately fired and fined.
"But we as a private organization can't do anything more. We can't flog him, we can't incarcerate him," said Prince, adding that he would be "happy to see" further investigation by law enforcement.
The Blackwater chairman said he also supports legislation that would guarantee Blackwater employees and other private security companies working for the State Department are subject to prosecution in U.S. courts. The House was expected to pass such a bill, sponsored by Rep. David Price, D-N.C., later on Tuesday.
Waxman also cited a November 2004 crash in Afghanistan of a plane piloted by Blackwater pilots as an example of what he said is the company's cavalier attitude about how it operates.
The crash of flight "Blackwater 61" killed the Blackwater crew and three U.S. military personnel who were passengers. According to information gathered by Waxman's staff, the Blackwater pilots lacked experience flying in Afghanistan, yet they were joy riding through a valley before crashing into a canyon wall.
Prince acknowledged pilot error led to the crash, but also said his company's aviators often fly missions in difficult conditions. He said the military violated its own rules by loading people and explosives on Blackwater 61. But Blackwater flew the mission anyway because that's what its government customer wanted.
"There is no FAA in Afghanistan," he said.
Throughout the hearing, Prince defended his staff as courageously defending U.S. diplomats overseas. He said 30 Blackwater contractors have been killed in action and no Americans have died while in its protection.
"We're the targets of the same ruthless enemies that have killed more than 3,800 American military personnel and thousands of innocent Iraqis," he said, sitting alone at the witness table.
Directly behind Prince sat Stephen Ryan, an attorney with the law firm McDermott Will & Emery.
Rep. Tom Davis, R-Va., the committee's top Republican, said the State Department is "trying to get it right," but its oversight of security contractors "seems to have some blind spots as well," according to his opening statement.
There's little data on contractor performance, Davis said, "so it's impossible to know if one company's rate of weapons related incidents is the product of a dangerous 'cowboy' culture or the predictable result of conducting higher-risk missions."
Davis said concentrating only on Blackwater won't answer the complex questions surrounding the use of security contractors.
"Nor are we likely to learn much by focusing on one sensational incident still under investigation," Davis said.
Prince rejected a claim in a congressional report released Monday, saying Blackwater does not engage in "offensive or military missions, but performs only defensive security functions."
He also disputed the math that concludes security contractors cost far more than American forces to protect U.S. diplomatic personnel. In its report, Waxman's committee said Blackwater charges the government $1,222 each day for a single security contractor, which works out to $445,000 on an annual basis. That's six times the cost of a U.S. soldier, the report said.
Prince said there's a large amount of expensive training for military personnel that the government pays for, but is not calculated in these unflattering estimates of what his company charges.
"That sergeant doesn't show up naked and untrained," Prince said.
Blackwater, founded in 1997 by Prince and headquartered in Moyock, N.C., is the largest of the State Department's three private security contractors with nearly 1,000 personnel working in Iraq. The others are Dyncorp and Triple Canopy, both based in Washington's northern Virginia suburbs.
Blackwater has had more shooting incidents than the other two companies combined, according to Waxman's report.
Among the Monday report's most serious charges was that Blackwater contractors sought to cover up a June 2005 shooting of an Iraqi man and the company paid - with State Department approval the families of others inadvertently killed by its guards.