Depends

If you were not asked who sponsors the project, you don't have to say it. But they probably will ask you what kind of work your LG do in a university ? This is something you need to work out with your LG to see how to answer this kind of question quickly and easy to understand. Don't try to mention too much details. Just mention something you know at your level. Try to stay within academic area. The key is don't talk too much you shouldn't talk about.

If they know anything about DoD, it could be very touchy. A lot of people got background check due to their policy. Hope you didn't get that. Good Luck.