Mitch and Cody are walking along the beach when they see the flamboyantly dressed Paolo Tomali go from one attractive woman to the next searching for the new “Miss Hot Tomali.” As they pass Paolo, they witness a disaster involving a parasailer and a boat that happens near the Sand and Sea Club. By the time they get to the scene, they are amazed to see that the situation being handed by ‘Bayguard, Inc.’ – a new firm that specializes in privatizing lifeguards. After the rescue is completed – without the help of Baywatch – Mitch is introduced to Alexis “Alex” Ryker, the beautiful, thirty year old CEO of Bayguard. She drops a hint that she might be going up against Mitch for the county contract. Mitch doesn’t believe she is any kind of a threat because the county lifeguards have had the contract for years. Nevertheless, he is on his guard. Sure enough, when he goes to meet the Chief the next day, he sees Alex has already shown her videotape of some of the amazing rescues her team has done. She couples this with a tape showcasing the Baywatch team slacking off. Mitch protests that the clips on the video were taken out of context, but the Chief feels that Alex’s proposal nevertheless warrants consideration. Meanwhile, Baywatch lifeguard Bridget has spotted Paolo and his Assistant walking along the beach and talking to some of the beauties there. He takes an especially long time in front of her tower before handing her his card. At first, she thinks of just throwing it away, but decides to keep it. Later on, Bridget questions April about Paolo. April, recognizing him as one of the premiere designers of bathing suits, gets excited about the prospect of showing him her designs. She convinces a reluctant Bridget to wear one of her suits and go to his open call for models. Even though Paolo offers her a contract, Bridget ultimately declines the modeling job, preferring her seat in the tower. However, Bridget tells April that Paolo was very impressed with her designs, and she should have quite a nice future in the business.
Mitch calls a general meeting of the lifeguards to discuss Alex’s tape. Of course, everyone has a valid excuse, but Mitch points out that valid or not, their behavior was less than exemplary and if they don’t want to lose the contract, they have to be on their best behavior. The next day, April sees a man having a heart attack. She calls for backup and heads for the water. However, before she can reach the scene, she is forcefully detained by one of the Bayguard men. When Mitch hears about the incident, he is infuriated and he takes April to the Bayguard HQ to confront Alex.
At Bayguard April spots the man who stopped her earlier. He is speaking with someone in a truck, to whom he gives what appears to be an envelope with money. The man in the truck is wearing a hat that says “Stunts.” Mitch returns to the office and watches Alex’s promo reel. The man that was just paid off is the parasailer from the early rescue, and Mitch realizes that Bayguard is staging accidents and rescues with professional stunt people.
Cody speaks with two of Alex’s lifeguards and gives them the impression he might consider joining her staff. As he is leaving, Mitch comes by and the two of them have a huge confrontation, culminating with Cody quitting. The next day, Alex introduces him to the Chief as her new lieutenant. She gives the Chief some ideas on marketing Baywatch and placing ads all over the lifeguard towers to bring the county much-needed money. Later, after everyone else has left, Cody approaches the Bayguard mobile tower truck and climbs inside. He calls Mitch on his cell phone and then boots up the lap top computer, reading the information. It turns out that Alex’s Bayguard operation isn’t all it seems – most of the lifeguards are on short term contracts due to run out any day now, and Alex will be left with a skeleton team. When he hears one of the Bayguards walking by he ducks down, trying to keep Mitch’s voice over the phone out of earshot, but his presence is ultimately discovered. He is yanked from the truck, and as they struggle, Alex arrives to separate them. Mitch is at Baywatch when Alex in comes roaring up, expels Cody from the passenger seat, and accuses him and the Baywatch team of spying on her. Mitch confronts her with his discovery of Bayguard’s staged rescues. As Alex denies this incredulously, April comes rushing in with news that a diabetic ten-year-old boy has gone missing. Both Mitch and Alex head off to rescue the boy.
Alex is disgusted that none of her guards has had any luck in finding out where Teddy is. Mitch suggests they work together, which she realizes is inevitable. A little girl tells them she has seen the boy, Teddy, by the storm drain canal opening. The two race over there, where they find the drain gate is open. Mitch goes through it and tells Alex to get back up, but she disobeys him because she wants to make the rescue herself, enters the drain, and falls into a whirlpool.
Realizing he now has to rescue her too, Mitch takes a deep breath and allows himself to get sucked into the whirlpool as well, where they discover the frightened Teddy. JD and April spot Alex’s Bayguard badge outside of the drain, and while JD goes for back up, April calls in to them. Looking through the top of the drain, she sees Mitch, Alex and the boy caught in the whirlpool. She turns off the power and drops down a harness so they can be pulled to safety.
The Chief pays Mitch a visit in his office. Mitch is eager to discuss the upcoming decision to be made about the future of Baywatch when the Chief ensures him that the competition is over: Bayguard withdrew their bid following Alex’s resignation as CEO. However, the Chief does express concerns that Mitch’s administrative abilities are not quite up to par, so she has hired Alex Ryker to be Baywatch’s new administrative consultant.
