Germany used Enigma during WWII. The Soviet Union used GOST during the cold war. USA used to use DES. Now that encryption algorithms are believed best as open source, are there any modern governments using proprietary encryption algorithms?
Quite frankly, the answer is obviously "yes". There's been quite a few disasters regarding crypto devices sold to governments that had other government's backdoors in their proprietary crypto.
Also, common sense dictates that it's highly unlikely that seldom-used military systems would be exchanged completely – if you transmit 10 bit in 20 years, it really doesn't matter how easy to crack it'd be if you had a couple 100 kb observations of known plaintext etc.
Also, I just googled "proprietary encryption" communication devices for military and you might want to do the same, read a couple of the first 20 results or so.