State Department To Blackwater: You're Fired, Leave Iraq by May $1.2 billion contract not renewed following Iraqi refusal to license U.S. firm.

January 30, 2009 -- Blackwater has been fired by the State Department from its job protecting U.S. diplomats in Iraq.

Executives of the controversial U.S. security company were notified today by the State Department that its five-year, $1.2 billion contract for services in Iraq will not be renewed in May, U.S. officials tell ABC News. The contract provides yearly options for cancellations.

In a statement, company spokesperson Anne Tyrrell said, "The company has always said that the security services we provide in Iraq would be temporary."

The move by the State Department follows the refusal of Iraqi officials to license Blackwater to operate in the country. Officials cited "lingering outrage" over the Sept. 2007 shooting by Blackwater guards that left 17 civilians dead.

Five former Blackwater guards have pleaded not guilty to federal charges that include 14 counts of manslaughter and 20 counts of attempted manslaughter. No charges were brought against the corporation.

The new U.S.-Iraq security agreement gives Iraq the authority to regulate private security companies operating in the country.

Blackwater president Gary Jackson told the Associated Press the company could pull its 1,000 security contractors and two dozen aircraft out of the country within 72 hours, if ordered to leave.

"We are honored to have provided this service for five years and proud of our success—while under out protection, no U.S. government official has been even seriously injured," Blackwater's spokesperson told ABCNews.com.

One of the company's constant critics, Rep. Jan Schakowsky (D-IL) said in a statement Friday: "We finally have a State Department that will no longer ignore the gross misconduct of contracting companies, like Blackwater. The State Department's decision not to renew Blackwater's contract in Iraq shows a dramatic departure from the previous administration. Instead of overriding the Iraqi government's decision to deny Blackwater a license to operate, the Obama Administration respected the sovereignty of the Iraqi government and did not renew Blackwater's contract."

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