The NCR snipers setup on Coyote Tail Ridge and were ordered to fire until they had exhausted their ammunition on the retreating Khans. The stories differ greatly from character to character due to variations in personality and state of mind.
A number of Khans were tracked to Bitter Springs by the NCR many years ago, when the NCR were first expanding their role in the Mojave. The NCR believed it to be the Khans base of operations, and sent a large detachment of troops to bring the raids to an end. At least one company of scout/snipers from the 1st Recon Battalion, Boone included, were sent to cut off escape at Bitter Springs' only other exit. Little did the NCR realize that Bitter Springs was primarily the home of Khan families, and not (as NCR command believed) a bastion of resistance. When the Khans were then pushed out, 1st Recon was ordered to fire on the ones retreating from the area. Radio contact with the NCR was sketchy at best, command not understanding that the situation involved unarmed people. Their superiors ordered them to "fire until you're out of ammunition.", 1st Recon obeyed and what happened at Bitter Springs has had a large psychological impact on Boone, motivating him to leave the New California Republic Army behind him.
The history through the eyes of Chance differs from that of Boone, in that the NCR are portrayed as being just as brutal as Caesar's Legion when it comes to pursuing their political agenda for a given area. There was no miscommunication with command, the NCR soldiers simply rode into the town and opened fire. 1st Recon is not seen at all during Chance's flashback, and none of the survivors had any difficulty in retreating. It had a significant psychological impact on Chance, driving him to the use of drugs and leaving him mute.
Papa Khan's account
Papa Khan states that the Great Khans had been flouting the NCR's demands, carrying out raids under the assumption that NCR's threats of retaliation were simply bluffs. Tensions rose higher and eventually the NCR tracked what they believed was a large raiding party back to Bitter Springs. Having been harassed continuously by the Khans, the NCR was looking to settle a score and did not expect Bitter Springs to be anything but a raider camp. Fueled by anger and frustration, goaded by the Great Khan's audacity and lacking appropriate intel, NCR command ordered the attack on the settlement to disastrous consequence.