BNUMBER:  B-257977
DATE:  November 15, 1995
TITLE:  EEOC - Payment for Training of Managment Interns

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Matter of:   EEOC - Payment for Training of Managment Interns

File:        B-257977

Date:        November 15, 1995
     
DIGEST

The Equal Employment Opportunity Commission may obligate its fiscal 
year funds in advance for the full cost of the two-year training 
program that the Office of Personnel Management (OPM) operates for the 
Presidential Management Intern (PMI) program.  Since under the PMI 
program an agency can hire an intern noncompetitively only if the 
intern completes the full two-year program, the OPM training may be 
viewed as an entire, nonseverable undertaking.  It is thus a bona fide 
need of the fiscal year in which EEOC appoints an intern under the 
program.

DECISION

The Director of the Financial Management Division of the U.S. Equal 
Employment Opportunity Commission requested an advance decision 
concerning whether the Commission should pay a bill from the Office of 
Personnel Management under the Presidential Management Intern program.  
Specifically, the Director questions whether the Commission may pay 
the entire cost of an intern's two year training program at the 
beginning of the program.  For the reasons indicated below, we 
conclude that the training of interns under the Presidential 
Management Intern program is an entire, nonseverable undertaking and 
that the Commission may pay the full costs of the training in advance.

Background

The Presidential Management Intern program (PMI) is a recruitment and 
career development training program designed to attract individuals 
with graduate or professional degrees into federal service.  Under the 
program, universities nominate students who then submit applications 
to the Office of Personnel Management (OPM).  The successful 
candidates are referred to participating agencies that may then 
appoint them as interns.

Upon acceptance of an agency offer, interns begin a continuous 
two-year career development training program.  During this period, 
interns receive training from their employing agency as well as 
centralized training from OPM.  The training is designed to expose 
interns to governmental issues and to assist them in applying 
management tools within their specific work environment.  Interns who 
successfully finish the full two-year program are eligible to be 
considered for permanent employment by their agencies.  The two-year 
training program must be completed by each individual intern.  
Substitution of one individual for another may not be made during the 
two-year period.

OPM carries out its coordination of the PMI program and its training 
of interns under the authority of Executive Order 12364, 47 Fed. Reg. 
22931 (May 24, 1982),[1] and the Training Act, 5 U.S.C.  4101-4118.  
It finances the program through its revolving fund established by 5 
U.S.C.  1304(e)(1).  Prior to 1993, OPM charged each agency 
participating in PMI on a yearly basis for each intern the agency 
hired.  In May 1993, however, OPM informed participating agencies that 
in the future they would each be required to pay for the costs of both 
years of the program in advance.  Each agency was billed accordingly.
  
Discussion

The Director questions whether the Commission may, consistent with the 
bona fide need rule, obligate its one year appropriation to cover 
training and related services being provided by OPM over a two-year 
period.   The bona fide need rule provides that an agency may obligate 
a fiscal year appropriation only to meet a legitimate, or bona fide, 
need arising in the fiscal year for which the appropriation was made.    
70 Comp. Gen. 296 (1991); 64 Comp. Gen. 359, 362 (1985).   Consistent 
with this rule, delivery of goods or performance of services in a 
fiscal year subsequent to the year in which a contract is executed 
does not necessarily preclude charging earlier fiscal year funds with 
the full cost of the goods or services.  70 Comp. Gen. at 297; 65 
Comp. Gen. 741, 743 (1986).  The test is whether the goods or services 
meet an immediate need of the agency, regardless of when the work is 
actually performed.  Id.

As a general rule, service contracts are viewed as chargeable to the 
appropriation current at the time the services are rendered.  71 Comp. 
Gen. 428, 429 (1992).  However, a need may arise in one fiscal year 
for services which, by their nature, cannot be separated for 
performance in separate fiscal years.  Id.  The question whether to 
charge the appropriation current on the date of contract award or to 
charge the appropriation current on the date the services are rendered 
turns on whether the services are "severable" or "nonseverable" (or 
"entire").  Id.; see         65 Comp. Gen. at 743.   A severable 
service is one in which the government receives value as the service 
is rendered.  A nonseverable or entire service is one in which the 
government receives value only when the entire service has been 
performed.

Training tends to be nonseverable (or entire).  Thus, when a training 
obligation is incurred and training begins in one fiscal year, the 
entire cost of the training is chargeable to that year even if the 
training continues into the next fiscal year.  See 70 Comp. Gen. 296, 
297 (1991).  We have further held that even if a training course does 
not begin until early in the next fiscal year, an agency may charge 
funds current at the time it enters into the training obligation so 
long as it has a valid need for the training at that time and the 
delay between the obligation and the start of the training is not 
excessive.   Id.

We have developed our view that training is entire rather than 
severable in the context of single training courses.  Thus, we view a 
course that extends over several sessions as an entirety; the 
government receives benefit for the course only when its employee has 
completed it.  This rationale, however, would not apply, for example, 
to a training curricula consisting of several courses, leading to an 
advance degree from an accredited college or university.  Although 
each of the individual courses may be viewed as entire, the curriculum 
itself is severable; the government presumably receving a benefit as 
its employee completes each course.

In the PMI program, the services being rendered by OPM, for which it 
receives reimbursement from agencies, consists of centralized training 
for interns as well as management of the program.  The training 
activities provided include an orientation seminar, cluster group 
meetings, special briefings and workshops, and an end of program 
seminar.  Although this training may appear to be a series of separate 
activities and therefore severable, on close analysis, we think it is 
more properly viewed as a single, nonseverable undertaking.

In participating in the PMI program, agencies are seeking to recruit 
trained master or doctoral degree graduates to their staffs.  Under 
the program agencies cannot offer permanent employment to an intern 
unless and until the intern has completed the two year program.[2]  
Thus, while in one sense the agency may benefit from the individual 
training activities attended by the intern, in another, greater sense, 
the agency receives no benefit from the individual OPM training 
activities until the program is completed.  It is only when the intern 
has received all of the OPM training and is thus eligible to be hired 
permanently that the agency receives a benefit.  Therefore, we do not 
object to viewing the services agencies receive from OPM under the PMI 
program as entire, rather than severable, and the agencies should 
charge the appropriation current at the time they engage an intern for 
the full cost of OPM's services.

Accordingly, the Commission may obligate its fiscal year funds for the 
full cost of OPM's two-year PMI training program at the time it 
engages an intern.  To the extent required by OPM, it may make full 
payment in advance.

/s/Robert P. Murphy
for Comptroller General  
of the United States

1. Executive Order 12364, May 24, 1982, reconstituted the PMI program 
which was originally established by Executive Order 12008, 42 Fed. 
Reg. 43373 (August 25, 1977).

2. An intern who does not complete the training may, independent of 
the PMI program, apply for a vacancy at the agency and complete with 
other applicants for the position.