Wesley Crusher runs through a corridor to catch up with his friend, Jake Kurland, and to tell him he’s sorry that Jake didn’t make the final exam for Starfleet Academy. Jake was short just 32 points, but says it is okay and wishes Wes the best, though he appears troubled as Wes leaves for Transporter room 8. The USS Enterprise-D is in orbit around Relva VII, where Wesley is taking the Starfleet Academy entrance exam. Captain Picard‘s old friend, Admiral Gregory Quinn is also at Relva and he requests to beam aboard immediately. He brings Lieutenant Commander Dexter Remmick with him, and wants a private meeting with Picard, on official business, much to the confusion of both Picard and Riker. The three officers go to the ready room.
Remmick is with the Inspector General‘s office and is there to conduct a thorough investigation of the Enterprise-D. According to Quinn, there is something seriously wrong on the Enterprise-D, but he won’t tell Picard what. He emphasizes that Picard is under orders to to cooperate fully with the investigation.
On Relva, Wes is in the testing center examining a flux coordinating sensor, when a Human girl comes in. She introduces herself as Oliana Mirren. She is also taking the test, and claims she’s heard of Wesley’s reputation aboard the Enterprise. Then a Vulcan, T’Shanik, enters, along with a Benzite, Mordock. In much the same way Olianna has heard of Wes, Wes has heard of Mordock; he constructed the Mordock Strategy.
The officer in charge of the test, Lieutenant Chang, enters. He tells them that they are all top candidates and any of them could qualify, but only one of them can go forward to the academy this year. He warns them that the test will be challenging, as well as exhausting and wishes them the best.
Later, Remmick is on the bridge, watching the crew, who are not happy with his presence. Sensing the crew’s unease, Riker goes to the ready room to ask Picard what is going on. Picard tells him he doesn’t know. Riker is unhappy with this, and he returns to bridge in a huff. Remmick asks and then demands that Riker talks to him, but Riker adamantly refuses, claiming that he has duties to attend to.
Down on the planet, the candidates are finishing one part of the exam, the hyperspace physics test. Oliana comments how lucky Wes and Mordock are that everything comes so easy to them, but Wesley denies this, saying he has to study hard. Olianna, who has taken a liking to Wes, says that he’s lucky that he’s cute, because his statement could be taken as obnoxious by someone else. As Olianna leaves, Wes can hardly believe he’s just been flattered by such an attractive girl, but begins to second-guess himself when he tries to explain Olianna’s behavior to Mordock.
Meanwhile, on the bridge, Riker apologizes to Picard for his earlier behavior, and agrees to go with Remmick to the ready room for an interview. Remmick questions Riker about discrepancies in the Captain’s logs. Unnerved, Riker argues that any questions about Picard should be brought to Picard himself face-to-face. Remmick vehemently reminds Riker that he is required to answer his questions unless he is trying to hide something. After a beat, Riker reluctantly agrees to proceed. Later, Remmick asks La Forge in engineering about the incident with Kosinski and the Traveler, and La Forge is coerced into acknowledging that the captain lost control of the ship. He then questions Troi about the incident with the USS Stargazer, concluding that it demonstrated a mental lapse on Picard’s part.
Some time later, Wesley is in an empty holodeck when Worf enters. Worf asks him about the test, and Wes says that he’s felt prepared for most of them. However, he’s most worried about the psych test, a test that confronts the examinee with their greatest fear. Wesley admits that he’s in the holodeck because he has no idea what his greatest fear is, and he’s trying to figure out what images might scare him the most. Worf tells him there’s no point in worrying about something that you can’t change and reveals that his own greatest difficulty is depending on someone else for his life. Wes realizes that, as part of being an officer, Worf faces that fear every day. When Wes asks if that means Worf has overcome his fear, Worf replies that, “it is still my enemy.”
Meanwhile, on the bridge, Tasha Yar detects an unauthorized entry to the shuttlebay. It is Jake Kurland, and he is stealing a shuttle, intending to sign onto a freighter at Beltane IX, unable to face his father after he failed to make the entrance exam. Picard orders him to return to the ship, but Jake refuses out of fear of his father’s reaction. This causes him to lose concentration on his flying for a moment and he accidentally unbalances the dilithium reactor, and his engine stalls. He is heading for Relva VII’s atmosphere, where he will burn up. The tractor beam won’t work and he’s out of transporter range. He can’t get the engine started as it needs time to cool down, and he starts to panic.
In a calm voice, Picard orders Jake to point the nose of the shuttle towards the planet. Jake initially resists, not realizing Picard’s plan, but Picard forcefully repeats the order and Jake does as he’s told. Picard tells him to restart the engines and pull up when he reaches a certain speed. Jake does this and manages to pull out in time. All on the bridge cheer, and La Forge explains to an astounded Remmick that he built up enough speed, and then bounced the shuttle off the atmosphere. Remmick questions Picard on how Jake got access to the shuttle, and the captain explains that Jake is a very capable Starfleet Academy candidate whos training includes shuttles. Remmick asks if the Jake has been trained in discipline, too, and Picard assures him that Jacke will get a refresher in that matter.
Meanwhile, down on Relva, Wes and Mordock are stopped in a corridor by a tall Starfleet officer called Rondon. He has a package for the operations department and asks where it is. Wesley steers him in the right direction, and, as he leaves, Rondon bumps into Wesley’s shoulder and starts to insult him. Wes begins to apologize, but suddenly Lt. Chang arrives, wondering what the problem is. Wes begins to explain, but Rondon interrupts with more insults, and raises a hand. Wes seems to realize something, and suddenly stops apologizing and shouts at Rondon. All of a sudden Rondon’s mood changes, and he laughs and leaves. Chang asks what happened, and Wes says he noticed from his webbed hands that he was a Zaldan, and Zaldans hate courtesy. They view it as insincere behavior meant to cover up true emotions. Chang congratulates Wes and tells him it was part of the test. Mordock gravely admits he wouldn’t have passed.
Back on the Enterprise, Remmick interviews other crewmembers, among them Worf and Data, who says that there is nothing wrong with Picard, despite Remmick’s claim to the contrary.
Remmick also questions Dr. Crusher, asking her how she feels serving with the man who was responsible for the death of her husband. She says her personal feelings are irrelevant to the investigation and none of his business. He finally questions Picard himself about his violation of the Prime Directive with the Edo. Picard is at the end of his patience, and points out that Remmick must have all the information he needs, as he has interviewed every officer on the ship. Remmick cryptically fires back, wondering that Picard is afraid that he will be found guilty if he keeps investigating. Now angry, Picard retorts that the only thing he guilty of is allowing Quinn’s charade to go on this long. He storms out of the room and heads for Quinn’s quarters to find out what’s really going on.
Picard demands that Quinn tells him what is going on. Quinn replies that Remmick’s report is nearly due and needs more time, but relents and calls for the investigator. Nearly at his wit’s end, Picard tells Quinn that this investigation has put a strain on their friendship, which Quinn acknowledges and sincerely regrets.
Back on Relva VII, the candidates are taking the dynamic relationships test and Mordock is having trouble, so Wes helps him. Mordock finishes first, and Chang comes in and tells him his time was the second fastest ever. Mordock admits that he does not deserve the honor and that Wes helped him, but Chang knows this already. Chang matter-of-factly states to Wes that his choice might not have been the best one, considering that he and Mordock are neck and neck for the lead in overall score. There is only one test left – the psych test.
On the Enterprise, Remmick makes his report to Quinn, and tells him he could find no problem on the ship despite his best efforts. The only thing of note he found was a ‘casual familiarity’ among the bridge crew, but he believes that comes from a sense of teamwork and family. Quinn is satisfied and dismisses Remmick, but before he leaves, he lets Picard know that he wants to transfer to the Enterprise once his tour in the Inspector General’s office is up, much to Picard’s visible discomfort.
Quinn urges Picard not to judge Remmick too harshly, as he is a good officer. He then finally explains that the purpose of the investigation was that he had to be sure about Picard. He says there is increasing reports of problems and erratic behavior among those in high positions in the Federation and that he believes someone is trying to destroy it, though he doesn’t know if the threat is external or internal. He says he needs people he can trust, and close to him, and offers Picard a promotion to admiral and a job as Commandant of Starfleet Academy. Picard says he doesn’t think he’s the best man for the job, but promises to think about it.
Lieutenant Chang leads Wes to Room 101 where the psych test will take place, and notes that Mordock will be finished with his in a moment. Just then, a visibly shaken Mordock walks out the door, barely aware of his surroundings. Wesley asks him if he is alright, to which Mordock replies, he will be in time. Wes nervously watches Mordock leave before Chang ushers him into the room and wishes him good luck.
The room is empty except for a chair. For a long while, nothing happens. Wes wonders for a moment if the proctors forgot about his exam, making him more nervous. Then, without warning, a large bang is heard outside. Wes tenatively goes out to investigate, and finds the corridor is deserted.
Suddenly, explosions, klaxons and cries for help ring out through the corridor and Wes runs towards them, realizing they are coming from the environmental lab. A computer voice indicates that the lab will be sealed off in sixty-five seconds. Wes yells for assistance, but no one is coming. He is the only one who can help. He opens the door and finds the lab is virtually destroyed. Debris and live wires are strewn everywhere, broken pipes are venting gaseous chemicals, and two technicians are calling for help.
One is trapped under a fallen pipe, the other is frozen with panic at the far end of the lab and won’t leave. Wes learns that the liquid hydrogen stored in the lab is about to explode, and if they don’t get out quickly, the computer will seal them in to contain the explosion. He attempts to convince the fearful technician to come and help free the other man, but he won’t move.
Wes frees the trapped man, and drags him out, but has only just enough time to get him out before the lab is sealed off. Just as Wes picks himself up, he finds Lt. Chang standing over him. Wes frantically tries to explain what happened, but Chang stops him and tells him it’s alright. The technician Wes had saved stands up, unhurt, and thanks Wesley, while the other walks out of the lab, very much alive, and gives Wes a wink and a nod.
Wes now realizes that this was the psych test, confronting his fear of having to choose between saving one man and leaving another. This was because the same situation resulted in the death of his father. Wes had overcome his fear and made a similar choice; whom he chose was not as important as the fact he actually chose to save whom he could; Wes had passed the test.
Picard is in his ready room, and Riker enters. Riker tells Picard that Remmick has left the ship. Picard says that there is nothing wrong aboard Enterprise, and Admiral Quinn is most impressed. When Riker asks Picard what they were after, Picard simply replies, “Me.” to take over as Commandant at Starfleet Academy. Riker congratulates him, but then picks up that Picard has not yet decided what he’s going to do. Picard disagrees, and tells him that he’s decided to go for a walk.
Some time later, Chang says he’s proud of all the candidates and hopes they will all return next year. He reveals that Mordock has won, and although Mordock protests that Wes shouldn’t have lost points because Wes helped him, Chang tells him that Wes’ help wasn’t the only difference between them. With this, Mordock becomes the first Benzite in Starfleet. The other candidates congratulate him, and Olianna gives Wes a friendly warning that she won’t be easy to beat next year.
On the Enterprise, Picard is walking down the corridor when he meets Jake, who apologizes for what he did. Picard reminds him that running away solves nothing, but compliments him for keeping his wits about him.
In the observation lounge, Wesley tells Picard that he failed the exam and let him down. Picard disagrees, saying that as long as he did his best, and would improve the following year, he shouldn’t worry. He reminds Wes that the only person he is truly competing against is himself. He then confides that he himself failed the test the first time.
Admiral Quinn is leaving, and says he’s sorry that Picard turned down the promotion. Picard promises that he will be ready if Quinn needs him. With that Quinn beams back down to Relva.
Picard arrives on the bridge and orders Wesley, resuming his duties as acting ensign, to set a course for Algeron IV. With that, the Enterprise warps away.