Eight of the Animal House guards in Kabul were fired Friday and two more quit before they could be canned in the sex and booze scandal.
The State Department also said heads could roll among its own officials in Kabul for failing to keep an eye on the guards, who turned their living quarters a few miles from the embassy into a party-hearty site for group gropes.
"I think there have been some very serious allegations about the oversight of this contract, about the State Department responsibilities for supervising this contract," said State spokesman Ian Kelly.
The embassy in Kabul said eight fired guards and the two who resigned are "being replaced immediately," and were quickly tossed out of Afghanistan.
The firings came a day after Secretary of State Clinton let it be known she was "genuinely offended" by photos and videos showing the guards drunk and scantily clad at bashes in their Camp Sullivan compound.
More firings are expected, but the State Department has made no moves to cancel the $189 million contract it gave ArmorGroup of North America, now owned by Wackenhut Services Inc., for 450 private guards to provide security for about 1,000 personnel working at the embassy.
But Kelly added that cancelling the contract "may be the end result of this" after three separate investigations are complete.
A Wackenhut spokeswoman declined comment on the firings but said "we are fully cooperating with the Department of State in their investigation of recent events."
Kelly said 120 guards have been questioned in the investigation by the State Department's inspector general, and ArmorGroup has been told "to remove all personnel involved in these disgusting events that you've seen in the photos."
The State Department also demanded that ArmorGroup replace its entire management team in Kabul, Kelly said.