The Enterprise is orbiting Relva 7, where Wesley is to take his entrance exams to the Academy. In a surprise, Picard is visited by his old friend, Admiral Gregory Quinn. In an even bigger surprise, when Quinn arrives, he is deadly serious and is accompanied by his aide, Lt. Commander Dexter Remmick, from the Inspector General's office, whose job is to find out exactly "what is wrong on this ship."

Remmick starts his questioning with Riker, asking him about Picard. Riker defends Picard, fiercely. Meanwhile, Wes is testing with his competitors: Oliana Mirren, a human, T'Shanik of Vulcan, and Mordock, a Benzite. He is doing well, and is becoming good friends with Mordock.

Remmick continues grilling the crew. He discusses the "Traveler" incident with Geordi, and the more recent Stargazer incident with Troi, calling it a mental lapse. Later, Remmick is on the bridge when a crisis comes up: Wes's friend Jake Kurland, whom he just beat to become the Enterprise's candidate for the Academy, steals a shuttle in embarrassment, and the shuttle becomes unbalanced, sending Jake towards Relva. Picard manages to save Jake, impressing even Remmick...for a moment.

Wes, down on Relva again, passes a crucial test of knowing other species' habits, and Remmick continues his grilling. This time, he questions Worf about the virus from "The Naked Now", then Beverly about her personal feelings about Picard (which she dismisses as being irrelevant and none of his business), and finally Picard himself, about having broken the Prime Directive in rescuing Wesley from the Edo. Picard finally decides enough is enough and confronts Quinn, who asks Remmick to deliver his final report.

Remmick is abashed to admit that he could not find anything wrong with the ship, or with Captain Picard, and Quinn dismisses him to tell Picard the real reason for this investigation. Quinn believes (with some others) that there's something very wrong with Starfleet, and he wants Picard close to him. He wants to promote Picard to Admiral and make him the head of Starfleet Academy. Picard, surprised, says he'll answer by that night. Meanwhile, Wes takes his psych test and successfully faces his greatest fear: having to make a decision where someone could die.

Despite his high score, however, Wesley loses the coveted Academy place to Mordock. Depressed, he returns to the Enterprise, where Picard comforts him, confidentially mentioning that he failed the first time as well. Picard tells Quinn that he's staying on the Enterprise, and Quinn leaves, saying "perhaps I see conspiracies...everywhere."