DS-260 petition does not allow derivative status for family members. What do I do if my children are US citizens born abroad?

I filed I-864 and DS-260 as well as all supporting documents for my foreign wife but was messaged by the NVC via https://ceac.state.gov/IV of the following:

My children were both born outside of the US but have 2 passports (1 for the USA and 1 for their mother's country). They also have a birth certificate (A Consular Report of Birth Abroad (CRBA)) and a social security number (SSN).

Why do my children need to file their own petitions when they are US citizens? Is it possible this is an error?

Thanks!