Lieutenant Commander Philip Francis Queeg arrives early. He is a plump, short man with a habit of playing with two steel balls that he always keeps in a pocket. As Queeg waits on deck to meet De Vriess, he sees the shocking mess of the Caine. Once in the captain's cabin, the two commanding officers exchange small talk. They both avoid mentioning the fact that Queeg is taking over the dubious honor of leading the Caine. Queeg reveals that he doesn't have very much experience in minesweeping or even in command, but he has read all the pertinent literature, and does not feel like he needs a training period to get used to the ship. He wants the transfer of power to be complete within forty-eight hours, which is amazingly quick, especially for an officer of Queeg's inexperience. They talk about the crew. When Queeg comes to Willie's fitness report, De Vriess explains that Willie is a good officer with a lot of potential and that the purpose of the poor report was to punish him for the lost communication. De Vriess says he was planning to change the report before turning it in.
When Willie meets Queeg, Queeg seems to take a liking to Willie. The next day, before he leaves, De Vriess explains that the Caine should be scrap, and so the rules of the regular Navy do not work with her. The ship is dangerous, overused, and severely lacking in living spaces, so the only way to treat the crew is to let them do things as they wish. The enlisted crew gives De Vriess a silver watch. Queeg immediately starts doing things his way. The sailors of the watch must now wear white uniforms and the oil slick on the deck must be cleaned up. He releases Willie from his three day confinement to the ship. He asks Willie to circulate word of an officer's meeting. Willie immediately takes a liking to the new captain for his soft-spoken method and his desire to return the ship to proper Navy appearance and procedure.
At the officer's meeting, Queeg gives a speech explaining that he wants things done not the right way, the wrong way, or the Navy way, but, "my way." When the captain leaves, Gorton, the executive officer, explains the new rule that all three officers of the duty section must be onboard. Queeg tells Keefer to reassume the duties of custodian of the publications log. After arguing, Keefer agrees to reassume the duty for as long as it takes Willie to master the communications manuals. Later that night, Willie asks Keefer for permission to visit Keggs aboard the Moulton. Keefer grants it without the approval of the executive officer, because the Moulton was within the Caine's nest of ships.
Lieutenant Maryk runs into Keefer on the deck while taking a break from a time consuming inventory that had not been done on the Caine for years. Seeing Keefer writing, Maryk says Keefer should hide his writing during the new captain's breaking-in period, but Keefer is defiant. Keefer thinks that Queeg will be good for the ship, but Maryk is still reverent of De Vriess's boat- handling skills and his knack for getting things done. Keefer explains his theory that the war is a chance for the "shoeshiners" of the Navy to have a brief moment of glory.
Gorton calls Keefer to his cabin and scolds him for his nonchalance on duty and for allowing Willie to leave the ship without his permission. Keefer finds that Queeg is the one who is angry with him. Gorton is forced to punish Keefer by quarantining him to the ship for twenty-four hours. Gorton explains that the restriction is from Queeg. An incoming action order distracts them. It says they will be accompanying a convoy to Pago Pago.
Captain Queeg's first test as commanding officer of the Caine comes the day before the ship's scheduled departure for Pago Pago. Queeg makes a major mistake when backing the ship out of its mooring: he scrapes the side of the Moulton, doing damage. The Caine gets grounded on the other side of the channel. Queeg departs from standard procedure and does not report the incident, simply signaling a nearby tug to help them out and flashing an apologetic message to the Moulton. A message arrives from ComServPac asking for an explanation of the morning's accident. Queeg is not shaken by the request, and sends Willie to deliver his response. Willie looks at the letter, in which Queeg passes off the incident as a failure by the engine room to respond to orders. Queeg also says that the officer responsible for the mistake had been relieved.