Washington - Troubled military contractor Blackwater USA is likely to be eased out of its role of guarding U.S. diplomats in Iraq in the aftermath of a shooting last month that left 17 Iraqi civilians dead, U.S. officials said Friday.

While no decisions have been finalized, Blackwater's role in Baghdad is likely to be taken over by one of two other contractors who provide security for the State Department in Iraq, the officials said. They are Triple Canopy and DynCorp International.

"There will be some sort of disengagement process, but it won't be that they're shown the door," said a State Department official. "As one builds down, another builds up."

He and other U.S. officials spoke on condition of anonymity because Secretary of State Condoleezza Rice hadn't received an oral report from a four-person team led by Patrick Kennedy, the department's director of management policy. The team reviewed State Department security operations in Iraq.

Blackwater has denied wrongdoing in the Sept. 16 shooting, the latest deadly incident involving its employees in Iraq, saying the guards were defending themselves. But reports by the U.S. military and the Iraqi government say the Blackwater guards fired without provocation.

Iraq's government has demanded that Blackwater leave Iraq within six months.

A company spokeswoman, Anne Tyrrell, didn't return a phone call seeking comment.

Blackwater's current work order under a State Department contract worth $834 million reportedly runs out in May 2008.

But replacing the Moyock, N.C., company with another contractor raises several questions.

It's unclear whether Blackwater employees in Iraq could simply switch employers. And, according to congressional officials, the State Department's Diplomatic Security service argues that it cannot operate without the helicopters that Blackwater provides for escort and rescue efforts.

In a related development Friday, Rep. Henry Waxman, D-Calif., who's been investigating State Department operations in Iraq, said in a letter that Blackwater attempted to transport two Iraqi military aircraft out of Iraq without official permission.

In the letter to Blackwater founder Erik Prince, Waxman said that an unnamed military official told his House Oversight Committee that "the Iraqi ministry of defense attempted to reclaim the aircraft, but that Blackwater would not comply."

Waxman also alleged that Prince had misled the committee in testimony earlier this month. Prince had said that the company's early contracts with the Coalition Provisional Authority in Iraq and the State Department were competitively bid, when in fact they were sole-source contracts.

Waxman demanded that Prince turn over a wealth of company information to the committee, including contract documents, Blackwater's profit data and information about Prince's compensation.

In the letter, and in a separate one to Rice, he asked for details about payments that the company has given to the families of Iraqis Blackwater killed.

****************************

Blackwater Wanted Iraqi Military Planes

By Richard Lardner

The Associated Press

Friday 19 October 2007

Washington - Blackwater USA tried to take at least two Iraqi military aircraft out of Iraq two years ago and refused to give the planes back when Iraqi officials sought to reclaim them, according to a congressional committee investigating the private security contractor.

Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, wants the company to provide all documents related to the attempted shipment and to explain where the aircraft are now.

In a letter sent Friday to Erik Prince, Blackwater's top executive, Waxman said he learned of the 2005 attempt from a military official who contacted the committee. That official is not identified in the letter, nor is the type of aircraft.

Waxman also is seeking a sweeping amount of information about Blackwater's business, including its contracts with the federal government, profits made since the company was founded a decade ago, Prince's personal earnings since 2001, and details about the payments to the families of Iraqis killed by Blackwater personnel.

Blackwater spokeswoman Anne Tyrrell said the company is cooperating with the committee but declined to comment further.

When Prince testified before the oversight committee on Oct. 2, he was asked to disclose financial data but declined to do so in an open setting, noting it would give his competitors an unfair edge.

"We're a private company and there's a key word there - private," Prince said.

In addition to his seven-page letter to Prince, Waxman also sent letters Friday to Defense Secretary Robert Gates and Secretary of State Condoleezza Rice seeking more information on Blackwater and its overseas operations.

Blackwater and two other security 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 and the bulk of that total goes to Blackwater.

Waxman wants Rice to supply the oversight committee with particulars about a 2004 contract Blackwater received from State on a noncompetitive basis in 2004. He also wants investigative reports and any other documents related to the discharge of weapons and improper or unprofessional behavior by Blackwater personnel.

From Gates, Waxman wants records and individuals with specifics about a Sept. 16 shooting in Baghdad involving Blackwater guards that left 17 Iraqis dead and a Dec. 24, 2006, incident in which a Blackwater guard killed an Iraqi security worker.

The guard, Andrew Moonen, was subsequently flown out of Iraq and fired by Blackwater. The Justice Department is continuing to investigate the case.

In all three letters, Waxman wants the information provided by Nov. 2.

-------