The review panel found poor communication between diplomats and military officials and too little oversight of contractors like Blackwater USA, two people familiar with the report's findings told the AP on Monday.
The State Department risks another incident like the Sept. 16 Blackwater shooting of 17 Iraqi civilians unless it quickly installs closer management of the private army guarding diplomats in Iraq, the independent panel privately told Secretary of State Condoleezza Rice.
Rice said she wants to discuss the findings with Gates face to face and intends to act quickly.
"The recommendations point a very good way forward," Rice told reporters Monday night. She provided no details but said she and Gates would "discuss how we will carry out better coordination, how we will make certain that the United States government moves this forward with one voice."
The group strongly recommended that Rice coordinate her next move with the Pentagon, and she plans to speak with Gates by phone before he returns from an overseas trip late this week, a State Department official said. A face-to-face meeting would follow.
The panel, named by Rice in the wake of the Sept. 16 killings, made no specific recommendations about what should happen to Blackwater, whose guards were escorting an official from the U.S. Embassy when they fired on civilians in a Baghdad square, those familiar with the report said. The killings have outraged Iraqis and focused attention on the shadowy rules surrounding heavily armed private guards.
"There needs to be unity of effort so that whatever's moving in the battle space is coordinated, and it needs to be understood, especially, by the military out in that battle space," one person said.
Those familiar with the recommendations in the report spoke on condition of anonymity because Rice has not yet decided what changes she will make.
The recommendations would apply to management of all private security contractors in Iraq, and recognize that it is impractical to eliminate such protection altogether. The military has resisted assuming responsibility for guarding large numbers of U.S. officials, and the State Department's own security force is too small and already stretched too thin.
The group's closely held report also identified a gap that left private guards for diplomats in Iraq outside the direct control of U.S. civilian or military law, and outside Iraqi law, a U.S. official said. It was not clear whether the report recommends placing private contractors squarely under U.S. civilian law, but Congress has already acted to place such guards under military law when working for the Pentagon.
The Iraqi government is demanding that Blackwater be expelled from the country within six months and that its employees be subject to Iraqi law.
One person familiar with the report said the group did not focus on the specific events of Sept. 16, looking instead at the rules of engagement, responsibilities and oversight for all security contractors.
The group told Rice she cannot wait for the results of a separate FBI inquiry into the Blackwater shootings, but should act within days or weeks and with a sense of urgency, the person said.
Rice agreed, the person said.
The group, led by a State Department official with long experience in Iraq, presented its findings to Rice on Monday and she is expected to act on them this week.
The panel included a retired senior diplomat, a retired four-star general and an intelligence expert.
Gates has already suggested he favors consolidated control of security contractors working for numerous U.S. government agencies, and discussed the idea briefly with Rice before the State Department's review was completed.
A separate Pentagon review recommended the U.S. military have more control over contractors in Iraq and that private guards fall under the military code of justice in some cases, Gates has said.
He said new guidelines for military commanders in Iraq probably will increase the number of private security contractors who will face prosecution or discipline for violence.
Gates said the five-member review team he sent to Iraq after the Blackwater shootings found a need for better coordination between the security details and the military.
Gates was in the Czech Republic when Rice met Monday with the panel she had named, and the two had not yet discussed the findings, a State Department official said.
Pentagon press secretary Geoff Morrell said last week that Gates thinks "it is worth exploring" whether one chain of command should oversee all private security contractors in Iraq.
Separately, Rice agreed to testify about State Department activities in Iraq on Thursday, at a hearing of the House Committee on Oversight and Government Reform.