There's been a change; thank you, fear mongering neocons
This is more than just the economics of providing public services. Armed yahoos (I don't care what their background is, murky legal waters have allowed Blackwater and its ilk to act as undisciplined hooligans) should not be the face of our civil authority.
That violent hooliganism was at work when the paranoid pigs (that's right, I said "pigs") of the sheriff's department turned back with gunfire hundreds of people trying to cross a bridge out of the devastation of New Orleans.
I'm personally aware that sometimes harsh things must be done for the sake of protecting yourself and good. But the abandonment of decency and decorum (the free expression of our civil liberties) on the chance of something bad happening is not the brave face of our nation.
Update: After some searching, I've only been able to find a reputable source saying that Blackwater security has been hired by private business owners. I have found a believable story of one Blackwater employee stating he had been deputized by the governor; doubt that he has been deputized, believe that some swaggering idiot would try to enhance his apparent authority.