WASHINGTON -- President Barack Obama fired a surprise broadside at the defense industry, saying he intends to clamp down on practices that have resulted in billions of dollars in cost overruns and delays in recent years.

At a time when Washington faces the prospect of bailing out multiple sectors of the economy, contractors' cost overruns are showing up on the radar of many in the capital. And the Pentagon, which spends about $330 billion a year to buy everything from fighters to paper clips, is a particular focus of the new...