The USAF began tracking stuff in orbit back in 1961, with its Air Force Space Surveillance System. The AFSSS (as it may or may not be abbreviated) is based on VHF technology, which limits the resolution of objects that can be tracked to about four inches. Space Fence, the first major component of which will be a radar post that goes live on Kwajalein Atoll in the Pacific in 2017, is going to use S-band radar to detect and track "even the smallest space objects," according to the Air Force.
Space Fence is called a fence because it'll form a sort of planar radar barrier stretching from east to west along the 33rd parallel from Georgia to California. Along this line, huge transmitters project massive amounts of radar energy out into space, and then radar receivers (like the one under construction at Kwajalein) track the energy reflected whenever a piece of space debris passes through the fence. Also, Space Fence is uncued, meaning that it doesn't have to know than an object exists to be able to spot and track it. This is important because when junk runs into other junk, it produces lots of baby pieces of junk that spread out every which way, and we don't always know that this happens until after the fact.
Tracking all of this crap is of course crucially important, since at orbital velocity, everything from screws to chips of paint can turn into projectiles capable of punching straight through the stuff that the ISS is made of. Every once in a while, the station has to fire up its engines to dodge something, and the only reason it's able to do that is because the Air Force knows what's on an intercept course.
Space Fence is due to come fully online with two or three radar sites sometime after 2020 for a total cost of $3.5 billion, but that's money well spent if we care about having a safe future in space.