U.S. Awards 3 Contracts for Secure Phones

The National Security Agency, as part of a move to tighten internal government security, has awarded initial production contracts to three major communication companies for a new generation of scrambler telephones.

The contracts, announced by the Defense Department on Monday, total $190 million and call for production of almost 50,000 of the new secure telephones for government offices.

The phone, dubbed the STU-III, will be made by AT&T; Technology Systems in Greensboro, N.C.; Motorola Inc. in Schaumburg, Ill., and RCA Aerospace & Defense in Camden, N.J., the Pentagon said.

The three companies were originally selected in 1985 to develop the telephone and then competed for a share of the initial production contract. The Pentagon said RCA had received a contract totaling $84.66 million; AT&T; a contract totaling $55.23 million, and Motorola one for $50.11 million.

Neither the Pentagon nor the NSA would say how many of the new phones were to be made by each company under the initial contracts. But all three companies will begin deliveries of the phones “in the latter part of 1987,” the Pentagon said in a prepared statement.

The new STU-III phone, incorporating the latest in digital computer technology, is said to be the size of a standard multi-line office phone. The NSA said last year it had set a target price of roughly $2,000 for each STU-III.

The new phone takes a person’s voice and rearranges it into a group of random sounds that sound like meaningless noise until they get to the other end and are put back in proper order. The phones translate voices into digital signals which are then scrambled by built-in computer chips. The process works so fast that neither party to the conversation is aware of any delay.