The U.S. State Department had employed a little-known British firm to manage the security in the U.S. diplomatic mission in Benghazi which in turn hired unarmed Libyans to guard the consulate premises, under a deal that fell out of line with the department’s usual practice of using larger firms to watch danger zones.

Blue Mountain Group which won a $387,000 -contract for one year from the State Department to protect the compound in May, sent just one British employee, recruited from the celebrity bodyguard circuit, to oversee the work, the Daily Telegraph reported citing unnamed sources.

The U.S. officials have defended the contract saying it was largely based on expediency since the Benghazi mission was temporary and no one knew how long it would remain in the Libyan city, Reuters reported Thursday.

The security lapses at the diplomatic compound came under government scrutiny following an attack on the consulate Sept. 11 that led to the deaths of U.S. Ambassador to Libya Chris Stevens and three other Americans.

The British company, based in Wales and run by a former member of the SAS (Special Air Service), Nigel Thomas, received the necessary documents to operate in Libya last year following the collapse of Muammar Gaddafi's regime, the Telegraph reported. The firm worked on short-term contacts to guard an expatriate housing compound and a five star hotel in Tripoli before landing the contract to guard the U.S. diplomatic compound.

According to the Telegraph, “Other firms in the security industry expressed surprise that Blue Mountain had won a large, high profile contract from the U.S. government.”

"The Libyan Ministry of Interior is generally not happy with Blue Mountain and had them on their close observation/target list,” an unnamed security source told the newspaper.

“Blue Mountain was virtually unknown to the circles that studied private security contractors working for the United States, before the events in Benghazi," Charles Tiefer, a commissioner at the Commission on Wartime Contracting, told Reuters.

In the wake of criticism targeting the White House for lax security, U.S. Secretary of State Hillary Clinton Tuesday said it was her job to ensure security in the U.S. diplomatic missions overseas and that she was responsible for the security failure in Benghazi consulate.

"I take responsibility," Clinton told CNN. "I'm in charge of the state department's 60,000-plus people all over the world (at) 275 posts."

The New York Times in a report last week said that the State Department had not included Libya on a list of “dangerous postings that are high priority for extra security resources.” Currently only the U.S. embassies in Iraq, Afghanistan and Pakistan are exempted from awarding the security contract to the lowest bidder.

The report said the large private security firms that have managed security for U.S. diplomats in Iraq and Afghanistan sought contracts in Libya too, but the State Department officials were not keen on employing them due to Libyan government’s edict banning foreign contractors.

Blue Mountain Group was able to work in Libya because it forged a business alliance with a local security firm, as required by Libyan regulations, Reuters reported.

The Libyan security guards the company hired were reportedly ill-prepared to protect themselves or others when armed militants stormed the building last month.

According to Reuters, one among the guards had been fired and another was suspected of throwing a homemade bomb into the U.S. compound in April.

The guards were instructed to sound the alarm over the radio and then run for cover if there was an attack, a Libyan who acted as a supervisor for the Blue Mountain local guard team at the mission told Reuters.