Blackwater’s Loss is DynCorp’s (NYSE: DCP) Gain

Last week, Blackwater Worldwide received the bad news that the U.S. Government could not renew its contract after the Iraqi government refused to renew its license to operate in their country. The decision stems from the 2007 incident where Blackwater security guards fired on, and killed 17 Iraqis in a disputed who-shot-first incident.

But their bad news could be investor’s gain.

Including Blackwater, the State Department uses three separate security contractors in Iraq. The only competition for the coveted security contracts now rests with Triple Canopy and DynCorp International (NYSE: DCP). For investors, DynCorp is the only publicly listed company of the three.

Before you think a few extra security guards in Iraq can’t be that expensive, consider that there are thousands of private security contractors in Iraq. They protect everything from government personnel to corporate executives and buildings, earning

Goosing infrastructure companies isn’t anything new. It’s been going on since 2003, when the U.S.’ “shock and awe” offensive overwhelmed Iraqi forces and resulted in negligible casualties. It was too easy. The casualties came later.

Two things will define 2009. One is the huge $1 trillion economic stimulus package featuring “smart grids,” roads and bridges.

The other is the winding down of the war in Iraq. I believe that this will supersede handling the aftermath of the current eruption of violence between Israel and Hamas in the Gaza Strip.

The promise of ending the war helped President-Elect Obama get elected, though I believe the policy differences between the two presidential candidates were not as great as generally perceived.

Now Iran and Afghanistan are Obama’s problem. It’s not quite as urgent as the deteriorating state of the economy, but it’s close. Obama will begin withdrawing troops as soon as he can. That may