While en-route to Starfleet Academy, where Picard is scheduled to deliver the year's commencement address, the crew learns of a devastating in-flight accident involving Wesley Crusher and his squadron. While all five ships involved were destroyed, Wesley, his squadron leader and two other crew members managed to transport to safety. However, the fifth team member, Wesley's good friend Joshua Albert, was killed instantly.
Picard, Dr. Crusher and the rest of the cadets' parents watch as Admiral Brand, the Academy superintendent, begins an investigation, questioning the four surviving cadets about the fatal flight. When the admiral finds discrepancies between their testimony and the flight plan they had filed, the squadron's leader, Nicholas Locarno, steps in. He reluctantly tells the investigating panel that Albert panicked and lost control during the maneuver and caused the accident. Albert's father, a Starfleet officer, is especially devastated by this news.
Because the U.S.S. Enterprise is Wesley's home, Admiral Brand allows Picard and the crew to begin their own, independent investigation of the accident. Meanwhile, Wesley meets with Locarno and the other squadron members to discuss the earlier inquiry. The three cadets are clearly upset with their leader for placing blame on Albert when the accident was not really his fault. Locarno tries to convince them that they aren't lying by omitting crucial details that will explain what really happened, and that they must go along with his plan in order to save their careers. Stressing the importance of working together as a team, he gets his squadron to agree with him. Later, when the hearing resumes, Wesley is questioned about the surviving data from his flight recorder. He and his comrades are shocked when the panel produces evidence that clearly contradicts Wesley's testimony. However, while he appears to be caught in a lie, Wesley refuses to explain.
Shaken by what is happening, Wesley subtly indicates to Beverly that he is lying. She shares her feelings with Picard, and the two join Geordi and Data to try to reach a conclusion. Together, they use all the data they have recovered to conclude that instead of the formation the squadron claimed to be practicing, Wesley and his comrades were working on an extremely dangerous maneuver.
Picard summons Wesley and tells the young man that he and the crew know what is going on. They know Wesley's squadron was working on a spectacular maneuver so dangerous it has been forbidden — a move they planned to perform at Starfleet Academy's commencement ceremony. Had they succeeded, Locarno would have graduated as a living legend. Unfortunately, their failure cost Albert his life. Picard tells Wesley that if he can't tell the truth, Picard himself will. Wesley immediately meets with the rest of his squadron, but Locarno again convinces them to stick together, reminding that Picard has no concrete proof. At the hearing, however, Wesley tells the truth, unable to allow Albert's father to go on believing his son was a coward. Locarno takes the blame and is expelled, while the rest of the squadron are told they must repeat the school year.