An investigation is underway: there's been a security breach, followed by an explosion in engineering which may well have been the result of sabotage. A Klingon exobiologist, J'Ddan, is under investigation for the security breach, and lots of circumstantial evidence points to him. He denies any involvement.

Showing up to help the investigation is retired Admiral Nora Satie, who's smoked out many a conspiracy in the past. Her investigations, combined with some of Worf's findings, quickly point to obvious guilt for J'Ddan, who confesses to his crime. However, when Sabin, a Betazoid aide to Satie, says that he appears to be telling the truth in denying the apparent sabotage, Satie concludes that there's a conspiracy on board.

Satie, whose father was a revered judge in the Federation (required reading in the Academy, at least in Picard's time) quickly gets to work. J'Ddan had few associates, so the number of people to question is small. Since he often received injections, Dr. Crusher is an obvious choice, but she has nothing useful to give. However, after Simon Tarses, a med-tech, testifies, Sabin immediately claims that Tarses is frightened and covering up a huge lie-and says "there's your man." Picard begins to get worried about this chain of events, refusing to hound an innocent man-especially when Geordi and Data's investigation later turns up strong evidence that the explosion in Engineering was a random accident, not sabotage.

Satie, however, will have none of it, and insists that the lack of sabotage doesn't imply a lack of conspiracy. At the second hearing for Tarses (which is now open to spectators, incidentally), Sabin ends up using a blatant lie about the explosion in Engineering to get Tarses off balance, and accuses him of being a known liar about his ancestry (his grandfather was not Vulcan, but Romulan). Tarses refuses to answer Sabin's questions.

Picard becomes more and more upset at the turn of events, and reminds Worf that Tarses has committed no crime. (Worf, however, is by now convinced that he must seek out the enemies of the Federation.) When Picard talks to Satie and demands an end to the hearings, threatening to go to Starfleet Command, Satie informs him that she's been in touch with Command, and the hearings are to be expanded. In addition, her old associate Adm. Henry of Starfleet Security is now coming on board to observe the hearings. Picard vows to fight, and quickly finds himself ordered to testify at the next set of hearings.

At Picard's hearing, Satie shows little mercy. She questions his devotion to the Prime Directive, claiming he's broken it nine times since taking command of the Enterprise. She asks how he can sleep at night after all the destruction and loss of life he caused as part of the Borg. The final straw, however, comes when Picard quotes her father's old warnings of curtailing freedom: she begins to rant that Picard dirties her father's memory by speaking of him, and vows to bring down Picard at any cost. Admiral Henry, in response, merely gets up-and walks out without a word.

Later, the hearings over and the matter settled, Picard tells Worf that although Satie is now discredited, others like her will always exist, waiting for the right moment to surface. "Vigilance, Mr. Worf. That is the price we have to continually pay."