Hogan and Co watch the Nazis fire upon an Allied flying squadron. One pilot ejects and they head towards him. Hogan recognises him as General Harry Sharp. They bring Sharp to Stalag 13 and hide him. Meanwhile, Klink has female company, Karen Richter, who is secretly an Underground agent. She tells Hogan that there is a set of plans in Klink's office for moving the guard towers back 100 feet into the woods. And work will be starting immediately. This is bad news for Hogan as the move will block their tunnel exit.
Meanwhile, General Burkhalter and Gertrude Linkmeier arrive on a camp inspection. Gertrude introduces her fiance, Major Wolfgang Karp (who only became engaged to her to avoid the Russian Front). Klink is delighted, because this means Burkhalter will not be trying to match him with Gertrude anymore. He offers to throw an engagement party for them and they accept. But Klink is not so delighted when Burkhalter tells him that Karp is going to be his new adjutant (Gertrude's idea), and he asks for Hogan's help. And to add to Hogan's problems, Sharp is a difficult guest who is getting on the nerves of all the men in the barracks.
At the party, Gertrude tells Hogan that Karp will take over Klink's job when she gives the word. Hogan drops hints that moving the guard towers could cause pains in the camp budget that Burkhalter may not like. This puts an end to moving the guard towers, but Klink announces that there will be a 24-hour guard in every barracks instead. Hogan realises that this is another of Gertrude's ideas; she is out to become the virtual commandant of Stalag 13 through Karp. If this keeps up, their operation will be out of business. They have to get rid of her, and the only way to do it is to destroy Karp.
So Hogan calls Karen, who had met Karp at the party. She comes to meet Karp and act as if she fancies him, complete with planting lipstick stains on him. As Hogan planned, this breaks off Karp's engagement to Gertrude when she finds out. Karp is packed off to the Russian Front. Sharp is smuggled out safely to England. To Klink's horror, Burkhalter orders him to attend a dinner table for two with Gertrude.