Blackwater CEO Erik Prince might have been unable to shed light on it. But William H. Moser, the deputy assistant secretary for logistics management, confirmed that in 2004, Blackwater received a "sole-source" contract for security -- in other words, a no-bid contract.

It was an "urgent situation," Moser explained. In 2004, the State Department had to make a rapid transition to assume diplomatic responsibilities with the demise of the Coalition Provisional Authority, and so "we decided to do a sole-source contract for Blackwater's services." He said that State was uncomfortable with the award, and asked the inspector-general to perform an audit at the end of 2004 -- which found that Blackwater had overbilled State for an undisclosed amount of money. (The company charged the government separately for "drivers" and "security specialists" who were in fact the same people.)

The next year, Blackwater was incorporated into State's Worldwide Protective Services contracting process, and its contract was "competitively awarded."