Knowing that the Allies won't bomb one of their own prisoner-of-war camps, the Germans store a secret rocket at Stalag 13 until its base on the Atlantic coast is completed. Hogan creates a phony "Kommandant of the Year" award as a diversion for his real plan to sabotage the weapon.
During a visit by the Inspector General, Hogan's men try to prevent the inept Colonel Klink from being transferred to the Russian Front. When their plan works too well and Klink is promoted to a position in Berlin, the POWs must get Klink unpromoted.
When the Air Force can't knock out an important German bridge, Hogan decides to try to destroy it from the ground, but he's short on explosives. Carter's efforts to manufacture some only destroy some of the tunnels underneath the prison camp, so Hogan decides to steal gunpowder from the German ammunition hut by covering the building with graffiti and then breaking into it while his men repaint it.
The Germans are looking for an escaped prisoner named Michaels who also happens to have made off with a German gun sight. It falls on Hogan and his men to get Michaels and the gun sight to England. To accomplish this Hogan convinces Klink he is fatigued and should have an Officer's Club to relax in. The ploy works and they begin to build it but are actually building a boat with the plan of sailing Michaels out.