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Obama to Order Overhaul of US Government Spending Process

U.S. President Barack Obama is ordering changes in the way the federal government does business. The goal is to root out wasteful spending in tough economic times.

President Obama has proposed massive increases in federal spending as a way to stimulate the economy. But at the same time, he says steps must be taken to make sure every dollar is spent wisely.

His latest target: the billions of dollars in government contracts awarded each year to private businesses.

Mr. Obama says the contracting system is broken, and far too much money is wasted.

"There is a fundamental public trust that we must uphold. The American people's money must be spent to advance their priorities, not to line the pockets of contractors or to maintain projects that don't work," the president said.

He says new rules will be drafted to ensure that all contracts give the best value for the dollar, and provide greater oversight and accountability. He says the savings could total roughly $40 billion each year.

"We are spending money on things that we don't need and we are paying more than we need to pay," he said.

The president says some of the biggest problems are in the area of defense contracting, where cost overruns are fairly common. Mr. Obama also singles out the awarding of contracts for goods and services in Iraq. He says no longer will contractors be given "a blank check."

"In Iraq, too much money has been paid out for services that were never performed, buildings that were never completed, [and] companies that skimmed off the top [overcharged and kept the money]," the president said.

Among those on hand for the president's announcement was Republican Senator John McCain, who ran against Mr. Obama in the 2008 election.

Senator McCain has long advocated strong measures to attack government waste. He has welcomed the action on procurement, but says it is not enough.

Just hours before Mr. Obama spoke, McCain blasted the president's decision to sign legislation designed to fund the federal government for the rest of the fiscal year. McCain said the bill is laden with unnecessary projects added by individual members of Congress.