Is it true that 'fair and reasonable value' includes profits for the employer and its affiliates?

The phrase 'fair and reasonable value' generally refers to the compensation or value assigned to goods, services, or contractual arrangements, emphasizing the need for a just evaluation that reflects the worth without being inflated or unjustly minimized. In most contexts, this term does not inherently include profits for the employer and its affiliates. The focus is primarily on ensuring that the value aligns with market standards and equitable rates as per the agreement between the parties involved.

When establishing fair and reasonable value, employers and contractors are expected to substantiate the expenses related to the service provided or goods rendered, ensuring that costs are justified and competitive within the market. Profits, while important for business sustainability, are typically regarded as additional earnings separate from the valuation of the primary transaction's fairness and reasonableness.

In certain contractual agreements, there may be termination clauses or performance incentives that factor in potential profit or return on investment. However, these elements do not define the fundamental principle of fair and reasonable value itself, reinforcing the notion that standardized compensation does not automatically encompass profit margins intended for employers and affiliates. Thus, the statement that 'fair and reasonable value' includes profits is not aligned with the general definitions and applications associated with this term.