President Obama is ordering creation of a "do not pay" list to keep shady contractors from getting government business.

In a just-issued presidential memo, the president gives federal agencies 90 days to come up with procedures for scrubbing databases for signs of past fraud before cutting any checks.

The effort is a response to well-documented examples of government agencies continuing to do business with known bad actors. The reason: agencies often haven't had access to -- or bothered to consult -- records that would alert them to past records of fraud.

That has resulted in some big-time waste: Federal auditors already have uncovered $180 million in federal benefits paid to 20,000 dead people, and another $230 million in checks cut to felons in jail or fugitive from justice, Biden said. In addition, the vice president disclosed that a yet-to-be issued Government Accountability Office report will tally "millions of dollars in erroneous payments" under the federal government's program to assist low-income households with heating bills.

New software, widely in use in the private sector but just now being deployed by the federal government, will enable Uncle Sam to end the practice, Vice President Biden and White House Budget Director Peter Orszag said today. It allows the government to cross-check multiple databases for background on prospective contractors. Orszag showed one example where five "companies" were traced to the same address: a house with a swimming pool and a boat dock.

The software already is in use to monitor contracts issued under the $787 billion economic stimulus act; now it will be deployed to other big-spending government agencies, starting with Medicare and Medicaid.

Biden predicted this will result in significant savings of taxpayer dollars. "We have weapons we didn't have or didn't use before," he said.

Under the president's do-not-pay order, Biden said, feds will be prohibited from doing business with: companies and individuals barred by other government agencies; suspected criminals; people who owe the government money.

(Posted by Kathy Kiely)