Several proposed spacecraft missions require positional knowledge of their optical elements to very high precision. This knowledge can be provided by a metrology system based on a laser interferometer incorporating the spacecraft optics. We present results from fabrication and testing of a lab-based frequency-modulated (FM) Michelson interferometer intended to maintain length stability to a few picometers. The instrument can be used to make precise relative distance measurements or it can be used to characterize orientation and polarization effects of system components commonly used in metrology gauges. External frequency modulation of a frequency-stabilized laser source and phase-sensitive detection are used to detect changes in the arm length difference of the interferometer. Arm length adjustments are made via a closed loop feedback system. A second system having a shared beampath with the primary system monitors the performance of the primary system. Preliminary data, operating in an ambient lab environment, demonstrate control to roughly 20 picometers rms for measurement times around 100 seconds.