I’d add the select list in the heading, so that it reads
Add bug for [project]
It’s the first thing a user will read, and it’s usually the first/simplest thing a user has in mind when filing a new bug. Also it will prevent cases where a user fills in a title and description and only then notices that the project she had in mind is (for whatever reason) not available.
Another suggestion: As you also seem to have the category "Enhancement", maybe you should rename "Bug" to "Issue", as an ehancement suggestion is typically not considered a bug.
Add issue for [project]
Or make the category select list part of the title, too:
Add [category] for [project]
So users can start filing new issues by selecting the category (Bug, Enhancement, …) and the project, which creates headings like "Add enhancement for Cute Cats", "Add bug for Dogs need love, too"