The problem was contacting his superiors could be too risky
It's not like Lefty and co. were with Pistone 24/7, he had plenty of opportunities to bail. But if he wasn't going to do so after that being forced to clean up four bodies in a cellar or ordered to assist in a murder contract, then he never was.
Pistone doesn't like what his superiors are telling him how it needs to be wrapped up/ended and Pistone thinks that there is more work to be completed.
Which shows what an idiot he is - he's already compromised himself by assisting in the bodies' clean-up (which, okay, can be argued as a case of having no choice in the matter) and then failing to report that along with the following murder of Nicky (much less defensible).
Contrary to movies, undercover agents are not given carte blanche to commit crimes, not even to fit in (the real 'Donnie Brasco' posed a jewel thief, and thus a non-violent criminal, and one who worked alone, hence he didn't have to bring any of his buddies along for his make-believe crimes).
By this stage, there is no way an agent with such a tarnished record would be of any use on the witness stand, or possibly even avoid jail time.
Pistone is not actually Lefty's prisoner (Lefty doesn't have him tied up or handcuffed or anything) but in a way he is Lefty's prisoner because if he doesn't follow Lefty's order, then in theory Lefty could kill him at any moment. Also, I'm not so sure Pistone actually persuaded Lefty with just words. Lefty is only going to be persuaded by actions and physical proof. So, in Lefty's mind, if Pistone/Donnie goes and murders someone, then he can't possibly be a cop because a cop wouldn't do something like that.
Again, he could - and should - have ran back to the Feds and called it quits *before* coming down to the docks with Lefty; once he did that, he has no possible way of avoid killing a man or becoming an accessory to murder without disarming/killing Lefty (since Pistone is armed, too), something which he is clearly unwilling to do (he can't even quit the scene after witnessing another man being shot in the head right in front of him).
It is implausible to think that Pistone would willingly go as far as he did and end up not committing the murder he agreed to do (particularly by the time Lefty has his gun as much trained on him as on Bruno, when Pistone really doesn't have a choice anymore).
Ultimately, Pistone even tells his wife that he's not becoming them because he already is them. So, that also shows Pistone's mindset towards the end of the movie.
Which shows he is totally deluded.
At the end of the day, he is *not* one of them. The Feds could expose his cover and force him to come back in, which they eventually did (no way would they suffer the embarrassment of one of their own becoming a gangster for real, the Bureau would be permanently tarnished).
When darkness overcomes the heart, Lil' Slugger appears...
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