Panetta canceled the contract earlier this year and the work is being shifted to government personnel, a person familiar with the contract said Friday. The person spoke on condition of anonymity to discuss the classified program.
Blackwater is now known as Xe Services. A spokesman was not immediately available for comment on the contract cancellation. The New York Times first reported the contract's existence in August.
The CIA's Predator program targets senior al-Qaida operatives and Taliban in Pakistan's tribal area along the border with Afghanistan, but the agency has never publicly confirmed its role in the operation.
Since Jan. 28, 2008, there have been at least 67 suspected U.S. missile strikes into Pakistan, according to Pakistani intelligence officials and witnesses interviewed by The Associated Press after each strike.
There was a fresh strike Tuesday, according to Pakistani officials. The target of that attack was identified Friday by a U.S government official as Saleh al-Somali, a senior al-Qaida operations planner.
U.S. intelligence has concluded that al-Somali was responsible for the terror group's operations outside the Afghanistan-Pakistan region, reaching into activities in Africa, the official said, and is suspected of being involved in plotting attacks against the United States and Europe. The official spoke on condition of anonymity to discuss covert operations.
News of the cancellation of the contract came on the heels of published reports late Thursday that Blackwater security operatives joined CIA agents in "snatch and grab" raids that took place regularly between 2004 and 2006, when violence from the insurgency in Iraq was escalating.
A U.S. official confirmed to AP on Thursday that Blackwater provided security and traveled with CIA teams on missions in war zones, but emphasized they were not hired to directly participate in sensitive CIA missions.
CIA Director Leon Panetta ordered a review several months ago of the company's contracts to be sure its guards only perform security-related work, the official said. The official spoke on condition of anonymity because he was not authorized to comment publicly.
Separately, CIA spokesman George Little said Friday that "at this time, Blackwater is not involved in any CIA operations other than in a security or support role."
Xe Services said Friday that Blackwater was not under contract for involvement in the secret raids.
"Blackwater USA was never under contract to participate in covert raids with CIA or Special Operations personnel in Iraq, Afghanistan or anywhere else. Any allegation to the contrary by any news organization would be false," Xe spokesman Mark Corallo said in an e-mailed statement.
The firm, based in Moyock, N.C., changed its corporate name this year after a series of use-of-force controversies, including a September 2007 shooting in Baghdad by five company security guards that left 17 civilians dead.
The CIA's paramilitary forces are small, and often borrow from U.S. military special forces to fill out their ranks. They rely on companies like Blackwater to provide drivers, convoy security, and perimeter protection on sensitive CIA operations.
The central question, according to the reports in The New York Times and The Washington Post, was whether private security guards crossed the line into direct participation in the CIA operations. Blackwater's role in providing security to CIA missions in war zones is already known on Capitol Hill.
