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“Blackwater had certain assets that the department determined the other contractors did not have,” he said, citing the company’s 24 aircraft as an example.

Nonetheless, Mr. Geisel said his office did “advise the department that they better start planning for when the Iraqis say this is it with Blackwater. And without getting into diplomatic negotiations, I believe the department is planning for this eventuality, which is clearly not too far off.”

Scott Amey, general counsel for the Project on Government Oversight, a nonprofit group that investigates federal contracting, said the State Department’s decision to continue paying Blackwater for security in Iraq raises broader questions about federal procurement practices.

“This case highlights the fact that the U.S. government over-relies on contractors and that it isn’t in a position to hold them accountable,” he said. “Continuing to do new business with questionable actors flies in the face of spreading trust, peace and democracy around the world.”

The contractor, based in North Carolina, recently underwent a big shake-up. The company changed its name to Xe, pronounced “zee,” last month. Also, a subsidiary, Blackwater Lodge and Training Center, which secured the State Department’s $22.2 million contract modification, was renamed.

Blackwater founder Erik Prince and company President Gary Jackson have resigned.

Mr. Prince has donated nearly a quarter-million dollars over the years to political causes. More than half of the donations went to the National Republican Congressional Committee and the Republican National Committee, according to a 2007 Democrat-led House committee report, citing data from the nonpartisan Center for Responsive Politics.

Blackwater also had spent hundreds of thousands of dollars lobbying Congress, according to Senate records. It contributed between $10,001 and $25,000 to former President Bill Clinton’s charitable foundation. Mr. Clinton released the donor information last year to avoid conflict-of-interest questions about his fundraising activities and the duties of his wife, Hillary Rodham Clinton, as President Obama’s secretary of state.

Despite any political good will that the company might have generated from its lobbying and political activities, it was unable to dodge fallout from the Sept. 16, 2007, shooting incident in Baghdad, in which prosecutors said six former guards went on an unprovoked rampage, shooting innocent Iraqi civilians.

Five of the former guards have pleaded not guilty to manslaughter charges, while a sixth pleaded guilty to voluntary manslaughter and attempted manslaughter. Attorneys for the former guards say they fired in self-defense.