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Operation Lovely Angel was the "official" designation for the first Starfleet battle simulation conducted on behalf of Starfleet in late 2365, under the observation and mediation of Zakdorn Master Strategist, Sirna Kolrami.
This wargame simulation took place in the Braslota system, between the USS Enterprise-D, under the command of Captain Jean-Luc Picard, and the 80-year-old star cruiser USS Hathaway, under the command of Captain William T. Riker.
Both ships were armed with laser pulse systems and allowed 48 hours to prepare. During battle, all "hits" were recorded electronically and, according to the rules, "if the computer registers 'damage,' it would react accordingly, shutting down the affected areas for the appropriate 'repair' time."
Initially, Picard resisted the request to conduct the simulation, due to the belief that "Starfleet is not a military organization," but rather, that their "purpose is exploration." He eventually agreed after taking into consideration the potential threat that was posed to the Federation by the Borg. He felt that by going through with the simulation, it would allow an officer an opportunity to consider multiple options.
Operation Lovely Angel was interrupted when the two "battling" ships were engaged by a Ferengi warship, which managed to cripple the Enterprise. Nevertheless, the crews of the Enterprise and Hathaway were able to work together to out-maneuver the Ferengi. (TNG: "Peak Performance")