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The Diplomatic Security and Anti-terrorism Act of 1986 allows private companies to compete for security contracts at U.S. embassies and missions. The first contract for private security services was awarded in 1994, but the State Department's use of security contractors greatly expanded in the early 2000's during the Iraq and Afghan wars. Security contractors are hired and managed by the State Department through umbrella contracts called Worldwide Protective Services (WPS) agreements. In March 2000, the State Department, through its Bureau of Diplomatic Security, awarded the first WPS contract to DynCorp International. Unable to fulfill all of the State Department's security needs, Blackwater and Triple Canopy were later hired as part of WPPS I. In 2005, the State Department entered into WPPS II with all three companies. WPPS III was awarded in 2009 to Triple Canopy and remains in effect today.

According to the State Department, today WPS task orders that form the contract are each overseen by two Diplomatic Security agents serving as Contracting Officer's Representatives (CORs). The CORs are assisted in their oversight responsibilities by Government Technical Monitors (GTMs). Interpreters are incorporated into protective security details to facilitate communication. Protective Security details are directly led and overseen by Diplomatic Security Agents or Security Protective Specialists. Training for private security contractors is more robust and incorporates the standards for personal accountability and behavior. Most of the WPPS contracts are classified, however, and this cannot be independently verified. The Department released several partial WPPS contracts to the public, as well as other guard services and protection contracts, which are listed below.

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The State Department monitors contract compliance and performance through written evaluations.In addition, each contract requires the contractor to provide the State Department with status reports, incident reports, and other pertinent information that assists the State Department in evaluating contractor performance.

The State Department also conducts semiannual performance assessments on WPPS contractors. Incident reports and performance evaluations allow the Department to determine whether the actions of PMSCs are adversely affecting the strategic or operational goals of the U.S. government. Though both incident reports and performance reviews are generally classified, some redacted versions have been made public through Freedom of Information Requests filed with the U.S. Department of State by journalist John Cook in November 2008.

The incident reports pertain only to U.S. Department of State contracts in Iraq, while the performance reviews cover work conducted under the WPPS umbrella contracts.

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The use of incident reporting and investigation is one way the State Department tracks the actions contracted security personnel. Private security contractors and subcontractors operating under State Department WPPS contracts must report serious incidents to the U.S. Embassy Regional Security Office (RSO) located in the country where the PMSCs are operating. The RSO is responsible for investigating serious incidents, which include damage of equipment or injury to persons, attacks, weapons discharge, crimes, and traffic accidents. In some instances, the RSO will review an incident report and determine that no further action is necessary. In other instances, the RSO may find that disciplinary or corrective actions are needed, or if the PMSCs' reports are insufficient, the RSO will appoint investigating officers or refer the matters to investigative authorities. Often, the RSO works with host nation authorities to complete investigations.

To understand how this process worked in Iraq, read the SIGIR Report Monitoring Responsibilities for Serious Incidents Involving Private Security Contractors Once U.S. Military Forces Leave Iraq Have Not Been Determined (SIGIR 11-019), 29 July 2011.

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State Department-funded security contractors are also subject to the Department's policies governing the use of deadly force and rules of engagement developed by each Embassy and approved by the Chief of Mission. Department-wide policy on the use of deadly force can be found in the Foreign Affairs Manual (12 FAM 023). The current version can be found online though additional procedures previously contained therein are now classified. An older version, 12 FAM 023, effective in November of 1998 and still in effect in 2005, contains policy on firearm usage, including authorization to carry firearms, use of force, the permissibility of firing warning shots or at moving vehicles (something that occurred often in Iraq, see incident reports, above).

Because private security contracts employed by the State Department are generally used to guard diplomatic personnel and property, individual U.S. embassies also issue rules and regulations for security contractors, such as the Mission Firearms Policy issued by the U.S. Embassy in Iraq in 2005. Among other requirements, the policy contains rules of engagement, including the permissible uses of deadly force, and incident reporting requirements.

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Department of Defense Final Rule 32 CFR Part 159, Private Security Contractors Operating in Contingency Operations, issued 11 August 2011 applies to private security contractors employed by the Department of State, as it governs the oversight of all DOD and non-DOD private security personnel in designated combat areas. This rule was timely because just a few months after it was adopted in its final form the DOD withdrew from Iraq, leaving the Embassy responsible for the activities of all U.S. government executive agencies and government contractors in Iraq.

There are also a number of specialized government departments that continually review and report on State Department policies, oversight and coordination of private security services. Reports from those departments can be found in the section U.S. Federal Research and Oversight Bodies. Additionally, Congressional Committees—in particular the House Committee on Foreign Affairs and Senate Committee on Foreign Relations—review State Department regulations and operations. Those reports and testimony can be found under U.S. Congressional Committee Oversight.