A shooter had died, though it wasn't immediately clear how, according to a Defense Department official and federal law enforcement official who spoke on condition of anonymity because they were not authorized to discuss the matter publicly.
Witnesses described a gunman opening fire from the fourth floor, aiming down on people in the first-floor cafeteria. Others said a gunman fired at them in a third-floor hallway.
As witnesses emerged from the building, a helicopter hovered over the building, schools were on lockdown and airplanes at nearby Reagan National Airport were briefly grounded. Less than 2 miles away, security was beefed up at the Capitol, but officials said there was no known threat there. President Barack Obama was getting frequent briefings on the shooting.
The exact number of people killed and the conditions of those wounded was not immediately known. About 3,000 people work at the Naval Sea Systems Command headquarters, which builds, buys and maintains the Navy's ships and submarines and combat systems.
Todd Brundidge, an executive assistant with Navy Sea Systems Command, said he and other co-workers encountered a gunman in a long hallway of their building on the third floor. The gunman was wearing all blue, he said.
"He just turned and started firing," Brundidge said.
Terrie Durham, an executive assistant with the same agency, said she also saw the gunman firing toward her and Brundidge.
"He aimed high and missed," she said. "He said nothing. As soon as I realized he was shooting, we just said, 'Get out of the building.'"
Rick Mason, a program management analyst who is a civilian with the U.S. Navy, said a gunman was shooting from a fourth floor overlook in the hallway outside his office. He said the gunman was aiming down at people in the building's cafeteria on the first floor. Mason said he could hear the shots but could not see a gunman.
Shortly after the gunfire, Mason said someone on an overhead speaker told workers to seek shelter and later to head for the gates at the complex.
Patricia Ward, a logistics management specialist, said she was in the cafeteria and heard shots. They sounded like "pop, pop, pop," she said. After a few seconds, there were more shots.
"Everybody just panicked at first," she said. "It was just people running, running, running."
Ward said security officers started directing people out of the building with guns drawn.
Police and federal agents from multiple law enforcement agencies responded. Ambulances were parked outside, streets in the area were closed and departures from Reagan National Airport were temporarily halted for security reasons.
Among the wounded was a D.C. police officer, according to a law enforcement official who spoke on the condition of anonymity because the person was not authorized to discuss an ongoing investigation.
A U.S. Park Police helicopter hovered over the building and appeared to drop a basket with a person onto the roof.
Officials at MedStar Washington Hospital Center said two shooting victims had been brought there.
District of Columbia schools officials said six schools and one administrative building in the vicinity of the Navy Yard were placed on lockdown. The action was taken out an abundance of caution, schools spokeswoman Melissa Salmanowitz said.
Naval Sea Systems Command is the largest of the Navy's five system commands and accounts for a quarter of the Navy's entire budget. It builds, buys and maintains the Navy's ships and submarines and their combat systems.
The Navy Yard is part of a fast-growing neighborhood on the banks of the Anacostia River in southeast Washington, just blocks from Nationals Park and about 1 ½ miles southeast of the U.S. Capitol.
The Associated Press contributed to this report.
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