The next morning, when he got into work, Queenan got around to checking the contact phone, and was mortified by the two text messages from Billy. Queenan realised that their undercover procedures were flawed. He immediately phoned Dignum and updated him with his FBI investigation. After Dignum's outraged response and some consideration, Dignum departed to check on their network of informants - what was Costello's beef with Billy. Queenan would check up on the car registration and talk to some contacts in the FBI.
Quennan was outraged when an hour later, he was told that the car was an SIU car used by Surveillance. Queenan wnat down to Surveillance, and upon hearing their explanation, verbally boxed the ears of the staff sergeant in charge and openly accused him and Sullivan of working for Costello. The truth didn't matter, the damage was done and needed to be broadcasted; (unspecified) undercover operations had been compromised by SIU incompetence. Queenan now felt that they had not been taking Costello's infiltration of the SIU seriously enough. Captain Ellerby was in a meeting, that didn't stop Queenan barging in and dramatically demanding Sullivan's head. Queenan then left to inform Dignum. Sullivan could recognise an act when he saw it, so long as he stayed cool he was safe.
Sullivan would have been more worried if he had been a fly on the wall later when Ellerby went to Queenan's office and was promptly shown the two text messages and the FBI corruption evidence that Queenan had. Queenan had decided that pending the outcome of Dignum's work, he would reinstate Billy, but in a way that would not stop the Feds from going after Billy. Queenan would continue to hide Billy's real cop identity, except from Ellerby. Sullivan would have been really worried if he had been there when Dignum met with Queenan the next day. Dignum, after saying that there were reports of a price on Billy's head, said that he had seen Sullivan texting during the joint FBI SIU processor operation. Sullivan was now suspect number one, therefore Ellerby was compromised, for now.