The Driver and Vehicle Licensing Agency has renewed its IT services deal with IBM, six months after a glitch in an IBM-run system led to 62,000 duplicate tax discs being sent out in the post.

The extension also follows a damning committee report a year ago, in which DVLA parent the Department for Transport was accused of “stupendous incompetence” in an IBM-based shared services scheme. It found the scheme could cost the taxpayer £81 million instead of making planned savings of £57 million.

In the DVLA contract extension just signed this month, the 10 year deal will run for an additional three years from 2012 to September 2015, focusing on working to transform the way the DVLA provides services to customers.

The agreement, known as ‘Partners Achieving Change Together’, covers the development and implementation of a range of business transformation and system integration projects. IBM is additionally responsible for DVLA's technical infrastructure and its ongoing operation, maintenance and support.

The supplier is also tasked with delivering a robust and flexible IT setup that will support a move to cross-government architecture.

Paul Evans, chief information officer at the DVLA, said the agreement offered “significant savings”. Brendon Riley, UK and Ireland chief executive at IBM insisted the supplier would be able to build on “past successes”.

In May, the 62,000 duplicated tax discs were sent out in error owing to a glitch in a system run by IBM that controlled the automatic processes, from drivers making applications online to processing and sending out the discs. IBM at the time declined to comment on the issue, referring comment to the DVLA.