IBM (NYSE:IBM) will help welcome the federal Department of Veterans Affairs to the 21st century as it has been awarded a contract to upgrade the agency's human resources system that was designed back in the early 1960s.

The technology specialist has been given a 10-year, $123 million contract to replace the agency's 50-year-old application with a new system delivered in a software-as-a-service model. IBM will build, operate, and maintain the system that will be deployed across the department for its more than 300,000 employees.

IBM's U.S. federal general manager Anne Altman said: "The VA's Human Resources system will provide a more flexible, stable, and capable system to meet the evolving needs of the agency and its thousands of employees. The VA's greatest asset is its people, and this new HR system will bolster the agency's mission to provide care and benefits for our nation's veterans and their families."

After a phase-in period expected to commence next January, IBM expects the new HR system will be implemented by the end of 2015. IBM will provide implementation services, as well as management and maintenance services for the new system over the course of the contract.