WASHINGTON - The U.S. State Department said Wednesday it has extended a contract for protecting American diplomats in Iraq with a subsidiary of the security firm once known as Blackwater USA even though the company does not have a license to operate in the country.

Spokesman Ian Kelly said the contract with Presidential Airways to provide air support for U.S. diplomats had been temporarily extended because the firm chosen to replace it was not yet ready to take over. The contract had been due to expire Thursday, to be taken over a day later by DynCorp International, he said.

"DynCorp came to us and asked for additional time," Kelly told reporters. DynCorp's request for additional time was made last week, he said, adding that the Iraqi government had been informed of the decision and had not registered objections.

Iraqi officials in Baghdad could not be reached immediately for comment.

Presidential is the air wing of Xe Services, which used to be known as Blackwater. The Iraqi government refused early this year to grant the company an operating license amid continued outrage over a lethal 2007 firefight involving some of its employees in Baghdad.

One senior State Department official said providing helicopter air support for American diplomats in Iraq - transporting them and overflying their convoys - is a "complex challenge," and "a slower transition to DynCorp taking over ... is in the best interest of the government."

"We unilaterally extended the current task order ... to ensure the continued security and safety of U.S. personnel in Iraq," the official said.

Kelly said DynCorp needed the extra time to get more equipment on the ground in Iraq but could not say how long the extension would last. The extension was first reported by ABC News on its Web site.

Other officials said they did not expect it to go beyond six months. Those officials spoke on condition of anonymity because they were not authorized to discuss the contract publicly.

The State Department informed Blackwater in January that it would not renew its contracts to provide security for U.S. diplomats in Iraq because of the Iraqi government's refusal to grant it an operating license.

The Presidential Airways contract was the last of those contracts to expire. Blackwater guards stopped protecting American diplomats in al-Hillah, Najaf and Karbala, all south of Baghdad, in August.

Iraqis had long complained about incidents involving Blackwater's ground operations. Then a shooting by Blackwater guards in Baghdad's Nisoor Square in September 2007 left 17 civilians dead, further strained relations between Baghdad and Washington and led U.S. prosecutors to bring charges against the Blackwater contractors involved.

The incident prompted a wide-ranging review of the State Department's security practices in Iraq and its dependence on contractors like Blackwater, which was most recently in the news last month when it was revealed that the CIA had turned to the firm when it revived a now-defunct plan to kill or capture terrorists in 2004.

It also has been the target of criticism from members of Congress, including Democratic Rep. Jan Schakowsky, who has been particularly outspoken on the subject. As recently as last month, Schakowsky wrote to Secretary of State Hillary Rodham Clinton and Defence Secretary Robert Gates to complain that their agencies were continuing to use the company.

"Every day that Blackwater operates in Iraq as a contractor for the United States our military and diplomatic objectives are put at serious risk," she said Wednesday in response to the State Department's contract extension.

"While I understand the need to protect United States personnel serving in Iraq, I do not believe that continuing to award contracts to Blackwater is in the best interest of our men and women overseas," Schakowsky said, accusing the company of having a "history of massive abuses and misconduct."

Once the extended Presidential Airways contract expires, the company no longer will be used in Iraq by the department, which has turned to DynCorp and another private security firm, Triple Canopy, to handle diplomatic protective services in the country.

But Xe continues to provide security for diplomats in other nations, most notably in Afghanistan.

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