Thanks to Tom Jones of CNSR for pointing this out:

NEWS TRANSCRIPT from the United States Department of Defense
DoD News Briefing
Under Secretary of Defense (Comptroller) Dr. Dov Zakheim
Friday, January 30, 2004 – 9:00 a.m. EST
Q: Why don’t you invest more in S&T? I looked in the R1 books and each
of the three components —
Briefer: Glad you had them, huh?
Q: Yes, they were helpful.
Briefer: No thanks to me, I can tell you that.
Q: They dropped down, the amount dropped down in all three categories of S&T for all the services with the exception of basic research for the Air Force. So you’ve seen a real drop.
Briefer: Not at all. Why do you say that? A drop relative to what? To the enacted?
Q: Yes.
Briefer: Of course, because the enacted always is higher than what’s in the requested and we always compare it to our requested. The reason is that a lot of what’s enacted are things that the Congress believes are important for us to do research in but we don’t necessarily share that same assessment.
Q: Are you meeting the three percent large goal that’s —
Briefer: No, because I don’t think it’s relevant any more. Three
percent might have been relevant but first of all we never met it. We were at 2.69 percent, now we’re going to go down to 2.62 percent. But the real question is, is that really a meaningful measure when you’re at a budget of $400 billion? That means we’re approximately $100 billion over where we were three years ago. Does that mean that we necessarily must throw $3 billion at universities and so on? There’s an argument for putting more money in but there’s not a knee-jerk argument percentage wise that says well, you increased $100 billion because you’re fighting a war in Iraq and you’re modernizing, you’re transforming, you’re doing this, that and the other. I need my three percent bite. It just doesn’t work.
I think what you’re finding here is by having $1.3 billion in basic research you’re putting an awful lot of money into universities, into labs, into research centers, and you don’t know if anything’s going to come out in military terms because that’s what basic research is all about. The same to some extent with applied research. And I would even argue the same to some extent with exploratory development. There’s a lot of money going into this and I don’t think three percent’s the relevant measure.
I am going to have to stop here. I apologize for not being able to walk you through the rest of the slides, but I am sure that my colleagues both in the services and OSD will help you out.