DOGE is searching for wasteful spending. It isn’t hard to find.

It is one of Washington’s most persistent and challenging problems: The federal government misspends at least $100 billion each year out of its multitrillion-dollar budget. Identifying the wasteful outlays isn’t the hardest part; it’s actually doing something about it.

Every year, agency reports posted online document billions in improper payments, which include fraud but also underpayments, duplicate payments, payments to ineligible recipients or for ineligible goods or services. According to the Government Accountability Office, they can also include correctly paid amounts that didn’t follow regulations, such as a contract missing a required signature.

Here’s what we know:

The top lines

In the most recent fiscal year, which ended in September 2024, the agencies that reported their improper payments identified $149 billion in such outlays, or 3.7% of payments that totaled $4.1 trillion. The reports cover a large chunk of total government spending, which the Congressional Budget Office put at is seeking approval to get that information from payroll-service providers instead as a way to cut overpayments.

Danielle Brian, executive director of the Project on Government Oversight, an independent watchdog group, said one of the largest sources of overspending—and one of the toughest to grapple with—is how the government handles contracts. Since the federal government is often the only customer of a certain product or service, such as weapons, it is difficult to know what price to pay.

That “allows for price gouging,” Brian said. “If that could get wrestled to the ground, that would have an extraordinary impact on the federal budget.” And since big federal contractors have a lot of sway on Capitol Hill, the methodology has proved hard to change.

Where does DOGE come in?

In addition to targeting bloat, President Trump and Elon Musk have put a big emphasis on rooting out fraud. The Musk-led Department of Government Efficiency says it has amassed $55 billion in estimated savings as of Feb. 17 through a combination of fraud detection, contract and lease renegotiations, grant cancellations, asset sales, workforce reductions and regulatory savings. About 20% of those savings come from actions taken on contracts, DOGE said on its website.

DOGE’s purported top savings come from the U.S. Agency for International Development, which the Trump administration has gutted. It is not a big source of improper payments.

The initial actions DOGE has taken could change as it focuses on the government’s largest programs, such as healthcare and military spending. Improper payments don’t always mean fraud was involved. Agencies tallied $7.2 billion—or 5% of improper payments—as court-confirmed fraud in 2024.

Christi Grimm, former inspector general for the Department of Health and Human Services, which oversees Medicare and Medicaid, said Trump and DOGE are characterizing improper payments as fraud. Grimm and other inspectors general who were fired last month by Trump are suing the administration, alleging it violated Congressional mandates protecting IGs.

A federal judge in a lawsuit over the administration’s freeze of federal funds made a similar point in a recent ruling. “The Defendants now plea that they are just trying to root out fraud,” U.S. District Judge John McConnell Jr. in Rhode Island wrote. “But the freezes in effect now were a result of the broad categorical order, not a specific finding of possible fraud.”

What won’t put a big dent in the federal budget? Firing government workers, which so far has been one of the main objectives of DOGE, Brian said.

“The entire cost of the federal workforce is a tiny fraction of the total cost of the federal budget,” she said. Legal observers have raised concerns about Musk’s efforts to shrink the size of the government, since the power of the purse lies in the hands of Congress.

A spokeswoman for DOGE didn’t respond to a request for comment.

Write to Paul Overberg at paul.overberg@wsj.com, Nate Rattner at nate.rattner@wsj.com and Scott Patterson at scott.patterson@wsj.com