Chomsky stressed that if military research were to take place anywhere in society, it should be in universities. (See his Language and Politics, p216-7.)
Chomsky made this argument while major student unrest was occurring at MIT. One of his talks that referred to this was entitled 'The Function of the University in a Time of Crisis'. It is reported that radical students in the audience of this lecture were 'surprised' and 'dismayed' by Chomsky's stance.
Here are two reports from the 30 December 1969 editions of, first, The Boston Globe and, then, The Los Angeles Times:
When Chomsky had made a similar argument around the time of the 1968 Columbia University occupation, many students were equally 'surprised':