Christopher Boyce (Hutton), the son of an FBI employee, gets a job with a defense contractor working with classified and sensitive information. Through that job, he reads a communiqué dealing with CIA plans to depose the Prime Minister of Australia. Disillusioned, he decides to provide the Soviets with U.S. government secrets as a form of punishment.
To further his plan, Boyce needs someone with experience in crossing borders and evading the authorities. He turns to childhood friend, small time drug dealer Andrew Daulton Lee (Penn). Lee, seeing the espionage as a business opportunity, gets greedy and creates problem for Boyce. Both of them are in over their heads.
Lee is arrested in Mexico City with undeveloped film and a postcard of the drop zone in his pocket. The Mexican police plan to charge him with the murder of an officer. Under torture he confesses to being a spy. Back in the United States, Boyce releases his falcon and waits for his own arrest.
The film gained a bit of infamy the year following its release for an incident where a man in Florida hijacked an HBO broadcast of the film in order to broadcast a message protesting the network's rates for satellite dish owners.
- The '70s: The film takes place in the 1970s. Opening segment of the film includes archive footage of late '60s and early '70s.
- Addled Addict: Lee, a minor coke dealer, hasn't gotten the memo about not getting high on your own supply.
- "Blackmail" Is Such an Ugly Word: Lee has plans to make the spying a regular business. Boyce balks because that's not why he got into this. Lee tells him that he's made copies but won't release them as long as Boyce plays along.
- Foreshadowing: In an early scene, we see Boyce writing a letter to a priest stating that he has lost his faith and wants to give up his studies for the priesthood. His disillusionment with the Catholic Church's teachings put him on a path to question not only his religious faith, but his faith in the political and economic system that he lives under.
- Happier Home Movie: The final moments of the film juxtapose scenes of Boyce and Lee in prison with images from their family's home movies, e.g. Boyce and Lee as choir boys, high school graduation, and joyous birthday parties with friends and family.
- I Have No Son!: Boyce's father disowns him at the end, unable to bear the shame of having a traitor for a son.
- Odd Friendship: Boyce is a seemingly strait-laced high achiever, while Lee is a rather pitiful drug-addicted loser. Several people wonder why they are such close friends, Boyce explains is that they've known each other since their early childhood days as altar boys.
- Police Brutality: The Mexican police mercilessly beat Lee (and dunk his head into the toilet) until they get a confession from him.
- Shameful Strip: Lee is made to sit in the police lieutenant's office wearing only briefs while the Foreign Service drops by to consult.
- Spy Cam: Lee is given one by the Soviet embassy so that Boyce doesn't have to photocopy documents at work.
- Swirlie: One of the treatments Lee is subjected to by Mexican police in order to make him confess.
- Too Dumb to Live: Lee is the personification of this trope. Some of the most glaring examples:
- When drunk and high at a party, he tells a girl that he's a spy for the Soviet Union while showing off his spy camera, and later tries to justify it to Boyce by saying that she wouldn't take him seriously anyway.
- Repeatedly showing up at the Soviet embassy, despite being told several times about the surveillance risk involved.
- Openly using cocaine and heroin on the streets of Mexico city.
- Wide-Eyed Idealist: Boyce is initially proud to be working (indirectly) with American intelligence. When he learns of them doing things that contradict his ideals he agrees to provide info to the Soviet Union as a way of shaming them. Ultimately he winds up being disappointed by both sides.