Decreasing defense funds are forcing defense contractors to adhere to tight budgets. In an effort to reduce costs and improve performance, many defense contractors are developing performance management programs for measuring, planning, evaluating, and improving organizational performance. This study examines the Software Engineering and Maintenance organization (SWEM) of General Electric's Military and Data Systems Operations and attempts to initiate a performance management program for SWEM by developing two key tools: a performance measurement plan and a COCOMO model for software maintenance cost and effort estimation. The study includes a detailed systems analysis of SWEM, discussion of performance management concepts, and development of equations, data collection procedures, and worksheets for implementing performance management tools. Both the performance measurement plan and COCOMO model are illustrated through SWEM examples and results used to perform cost and sensitivity analyses. The study concludes with an evaluation of study methodologies and recommendations for future applications of study findings.