It's hostage negotiation training time at Quantico. The team goes to a nice little FBI subdivision armed with paintball guns, and they are tested on their skills. The whole point of the exercise is to see if they can make the right decision in a split second, or to see if they will choke under pressure.
Alex chokes. She gets her team killed. Why? Because she can't shake the image of her father and the idea that she killed a hero. This is exactly what Liam wants. He wants her out of Quantico, and even though he tasks Ryan with doing it, Ryan chooses Alex. Miranda informs Alex that her father wasn't a good man, so she didn't kill a hero.
At the last minute, Simon chooses to save Alex instead of letting the FBI take her in. During Simon's hesitation to get Alex out of there, Ryan figures out that Simon is working for Clayton, the Deputy Director of the FBI.
They learn that the wire they found from the bomb was made by Shelby's company, and so they go pay her a visit. Ryan shows up at Shelby's house to warn Alex and Simon that the FBI is coming. Alex sends Ryan and Simon away, and she is left with Shelby. Alex will get her answers.