In Ellerby's office, Queenan levelled with Ellerby. He stressed that Billy had a lead on the mole but that no one, not even Sullivan must know. Queenan then pointed out that Billy had a perfect, fabricated, criminal record. So they could not take perfect police records for granted. This was a deliberate, discrete, jibe at Sullivan to make Ellerby more open minded and critical. The question was, how to handle the Feds who had just arrived.
As the Feds walked down the corridor, they could see that the head Fed was indeed one of those Queenan had photo-ed talking to Costello. Queenan decided to confront him with the incriminating photo. They would send the Feds packing without revealing that Billy was in any way working for the SIU. Then they could work out how to set up a trap for Sullivan.