SafeNet Inc. won a $150 million contract from the Defense Department to supply its new top-secret encryptor technology, the largest contract the Belcamp-based network security company has won.

The company also received an initial $18 million order under the contract for about 2,000 of the KIV-7M Link Encryptor devices used to protect the secrecy of sensitive communications. The units will ship this month.

The devices are compact, rugged boxes that incorporate the latest security algorithms. Their dual channels let users communicate with older encryptor devices. The encryptors also can be reprogrammed, so they can be updated with new security features.

"As the cryptographic algorithms evolve over time, we can reprogram the device rather than the government having to go out and procure new devices," said Jim Summers, president of SafeNet's Mykotronx division, which developed the encryptor and won the contract. Making upgrades or fielding new algorithms can be done with a software load, he said.

SafeNet sells the encryption units exclusively to the federal government. The devices are installed in buildings, military Humvees, tanks, aircraft, submarines and backpacks.

The contract is about three times larger than the company expected because of a "groundswell of demand" for the device, Summers said. The award represents half of the company's minimal market projection for the product, $300 million over the next six years, he said.

The KIV-7M is one of the first encryption products to fully comply with the government's cryptographic modernization program, designed to improve the security of the country's top-secret communications, said Chris Feede, SafeNet senior vice president and general manager of the company's enterprise security division, during a recent conference call with analysts.

The modernization program, which is administered by the National Security Agency, will enable the government to upgrade the security of its communication architectures and so protect the flow and exchange of operational information.

SafeNet provides network security products using encryption technology to secure electronic commerce transactions and communication over computer networks for the government and commercial sectors. Its other federal clients include the Commerce, Justice, Homeland Security, State and Treasury departments, the Air Force and Navy, the Central Intelligence Agency, and the Internal Revenue Service. The company employs about 900 workers and had 2004 revenue of $201.6 million.

Roseanne Gerin is a staff writer with Washington Technology. For more on technology contracts, go to www.washingtontechnology.com.