A Washington Post correspondent in Baghdad spoke with several officers about the incident on Sept. 16 in which employees of Blackwater USA opened fire on a group of cars, claiming they had come under fire. The company is contracted by the U.S. Department of State.

"This is a nightmare," said one senior U.S. military officer. "We had guys who saw the aftermath, and it was very bad. This is going to hurt us badly."

At least three separate investigations into the incident involving the Blackwater employees are under way, the report said. The company hires mostly former Navy Seals, which another U.S. officer said made for trouble.

"They are immature shooters and have very quick trigger fingers. Their tendency is shoot first and ask questions later," said a U.S. Army lieutenant colonel.

Blackwater officials declined to comment on the incident, the Post said.