Performance-based logistics promises savings.

The Pentagon's top weapons buyer Frank Kendall hammers home to his staff the importance of "incentivizing" contractors to cut costs in every way possible. One area where he hopes to squeeze significant sayings is in weapons maintenance, a $170 billion a year business that is, by most accounts, fraught with inefficiency.

Kendall, who is undersecretary of defense for acquisition, technology and logistics, has directed procurement officials to investigate commercial-like approaches to maintaining equipment as an alternative to traditional contracts. The commercial method, known as "performance-based logistics," was in vogue in the 1990s but fell out of favor in recent years.

According to the consulting firm...