- The Washington Times - Thursday, March 5, 2009

WASHINGTON (AP) — In yet another reversal of Bush administration policy, President Barack Obama ordered an overhaul of the way the government hands out contracts, promising to curtail a system that led to waste and abuse in Iraq and Afghanistan.

Obama said Wednesday the changes could save up to $40 billion a year. The move is bound to be popular with Americans who voiced disgust with perceived special treatment for companies like Halliburton, the oil industry services company once run by former Vice President Dick Cheney, which has billed the government billions for work in Iraq. The company was frequently received lucrative government contracts without having to go through a competitive bidding process.

“In Iraq, too much money has been paid out for services that were never performed, buildings that were never completed, companies that skimmed off the top,” Obama said. “It’s time for this waste and inefficiency to end.”

Dozens of people have been charged with bribery and other contract fraud crimes as part of a Justice Department crackdown. Fraud has been particularly prevalent following the U.S. invasions of Afghanistan and Iraq, where billions of dollars was spent quickly and often with little oversight.

More than 140 investigations into allegations of contract fraud in Iraq, Kuwait and Afghanistan are under way.

Obama took aim at the Bush administration without directly naming his predecessor, denouncing only an “era of irresponsibility.” He noted that spending on government contracts has doubled to more than $500 billion since 2001 — the same eight-year time frame that Republican President George W. Bush led the executive branch.

Obama joined Republican Sen. John McCain, his presidential campaign rival, and other lawmakers to announce his administration’s commitment to the new rules for awarding contracts.

Obama and McCain’s appearance at a fiscal-discipline event was notable because of its timing. Just this week, McCain was on the Senate floor railing against Obama for going along with a spending bill packed with lawmakers’ pet projects. “So much for the promise of change,” McCain said then. He made no comments while standing with Obama on Wednesday.

During last week’s White House meetings on the country’s financial future, lawmakers and officials bluntly told top Obama aides that government contracts needed to be handled in a better way.

The president’s own fleet of Marine One helicopters became an illustration of out-of-control spending. A review of 95 defense projects by the Government Accountability Office, the auditing arm of Congress, found that the projects exceeded the budget by $295 billion over the course of several years.

Obama’s presidential memo directs Peter Orszag, director of the White House Office of Management and Budget, to work with Cabinet and agency officials to draft new contracting rules by the end of September. Those new rules, White House aides say, will make it more difficult for contractors to bilk taxpayers and make some half-trillion dollars in federal contracts each year more accessible to independent contractors.

Also Wednesday, the Obama administration kicked off a new program designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.

The $75 billion program offers refinanced mortgages or modified loans with lower monthly payments. Yet its refinancing plan is limited to borrowers who owe up to 5 percent more than their home’s current value.

Obama has been working to ease the collapsing housing market that put the economic crisis in high gear late last year. He also is sticking to his course of huge spending designed to put a brake on rising unemployment while instituting modest tax cuts for low- and middle-income American workers.

Treasury Secretary Timothy Geithner and Orszag returned to Capitol Hill on Wednesday for a second day of hearings on Obama’s $3.6 trillion tax and spending proposal. Both faced tough questions about the tax package.

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