WASHINGTON ( CNN ) -- The State Department will not renew the contract of security contractor Blackwater Worldwide when it expires in May , a senior State Department official said Friday . Heavily armed Blackwater guards scan downtown Baghdad , Iraq , from a helicopter in 2003 . The decision was made after the Iraqi government refused last week to renew the firm 's operating license because of a 2007 incident in which the Iraqi government says security guards -- then employed by Blackwater -- fired on and killed 17 Iraqis . Blackwater 's latest `` task order '' expires in May , and the senior official said that `` one of the conditions is that you have to have a license '' to continue working in the country . `` No license , no renewal , '' the official said . `` If they do n't have a license to operate , we would certainly not renew the task order . '' The official said the decision would not affect other contracts Blackwater has with the State Department to protect American diplomats around the world . As part of a contract to protect American diplomats and other employees worldwide , the State Department hired Blackwater for a multiyear assignment in Iraq , renewable each year . Blackwater , one of three security firms working for the United States in Iraq , has one of the biggest security contracts there . Officials said the State Department is talking with security firms DynCorp International and Triple Canopy , which share the Iraq contract with Blackwater , about picking up Blackwater 's duties . The Iraqi government has been unclear about when Blackwater will have to cease operations . But the official said , `` We are working to make sure our people are protected . '' Losing the contract will be a huge blow to Blackwater . It has been estimated that the Iraq contract makes up one-third to one-half of the privately held company 's business . Blackwater has about two dozen aircraft in Iraq and 1,000 personnel . Earlier this month , five former Blackwater security guards pleaded not guilty to charges of voluntary manslaughter and other serious crimes stemming from their involvement in the September 16 , 2007 , shootings in a Baghdad square . A sixth former security guard has pleaded guilty to voluntary manslaughter and attempted manslaughter . Watch why Blackwater is notorious among Iraqis » . Blackwater says its employees were returning fire after they were attacked by armed insurgents . An Iraqi investigation concluded that the guards randomly fired at civilians without provocation . The company does not face charges . But the Baghdad incident exacerbated the feelings of many Iraqis that private American security contractors have operated since 2003 with little regard for Iraqi law or life . The indictment of the five men represents the first prosecution of non-Defense Department contractors under the Military Extraterritorial Jurisdiction Act . The act was amended in 2004 to allow the Justice Department to prosecute such personnel providing services `` in support of the mission of the Department of Defense overseas . '' The recently approved U.S.-Iraqi security agreement specifies that U.S. civilian contractors will no longer be immune from Iraqi prosecution for crimes committed in that country . Iraq has required the licensing of private security companies since 2004 , but the provision was not strictly enforced . Last year , the State Department renewed Blackwater 's contract over strong objections from the Iraqi government . Starting January 1 , the Iraqi government has mandated that all contractors obtain licenses to operate . As of Wednesday , Blackwater said it had not been officially notified of any Iraqi decision not to renew its license . CNN 's Suzanne Simons contributed to this report .
Contract expires in 2007 and wo n't be renewed , the Military Extraterritorial Jurisdiction Act says . Decision comes after security contractor loses right to operate in the United States . one-half ex-Blackwater guards pleaded not guilty to charges related to May shootings .