Obama aims to save billions in federal contracts including defence

US President Barack Obama will on Wednesday outline a plan to save tens of billion dollars a year in wasteful government spending, especially targeting bloated defence contracting.

Obama will sign a presidential memorandum reforming the contracting system across the entire government, in line with a vow to cut unnecessary waste, an administration official said.

The president is set to highlight steps being taken by Defence Secretary Robert Gates to overhaul military procurement at the Pentagon.

The reforms will require the White House budget director to work with cabinet members and agency heads to frame tough new guidelines on contracting work by the end of September.

Obama aims to save $40 billion each year by halting outsourcing in some government jobs, and by ending "no-bid" contracts for favored companies which proliferated in US operations in Iraq.

Last month, Obama said he had ordered a review into huge cost overruns on a new fleet of presidential helicopters, after his old foe John McCain complained at the skyrocketing cost.

"Your helicopter is now going to cost as much as Air Force One," McCain said at a White House fiscal responsibility summit, raising concerns about how many military projects tend to come in well over budget.

"I don't think that there's any more graphic demonstration of how good ideas have cost taxpayers an enormous amount of money."

The official said Obama would highlight McCain's crusade against government waste, particularly in the Pentagon, during his remarks on Wednesday.

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