Obama seeks to end abuses in federal contracting

WASHINGTON -- President Obama aimed his budget knife at federal contractors Wednesday, pledging to reduce the $518 billion annual cost of outside contracts by $40 billion a year.

Faced with a $1.75 trillion budget deficit that dwarfs any in history, Obama said his administration will reform contracting procedures in an effort to reduce cost overruns, end no-bid contracts and weed out waste and corruption.

He singled out defense contracting, a target of key lawmakers in Congress, including Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., Obama's opponent in last year's election, who attended the press conference. The Government Accountability Office last year examined 95 defense projects and found $295 billion in cost overruns.

"I reject the false choice between securing this nation and wasting billions of taxpayer dollars," Obama said. "No more excuses, no more delays, the days of giving defense contractors a blank check are over."

The federal government is the largest purchaser of goods and services in the world. Last year, it spent $518 billion on government contracts, twice what it spent six years earlier, according to government statistics.

Some of the money went to contractors who previously engaged in serious misconduct, such as failing to pay taxes, bribing foreign officials, falsifying records submitted to the government, and performing contractual work so poorly that fatalities resulted, according to the independent Project on Government Oversight.

"In some cases contracts were awarded without competition, in some cases contractors were overseeing other contractors," Obama said.

In his budget and "fiscal responsibility summit" last week, Obama cited no-bid contracts in Iraq as one example of government spending he would seek to reduce. On Wednesday, he said some of those contracts went for services that never were performed or left uncompleted.

"It's time for this waste and inefficiency to end," the president said. "We can't keep spending good money after bad."