US Navy Lt. Commander Tom Farrell (Kevin Costner) is a Pentagon officer assigned to the personal staff of the scheming Secretary of Defense David Brice (Gene Hackman). At a formal ball in Washington DC, Farrell is first introduced to Brice through the latter's fanatically devoted general council, Scott Pritchard (Will Patton). Exhibiting the most suggestive body language at the ball, sexy Susan Atwell (Sean Young) also meets Farrell. As their chemistry immediately clicks, they have a quick tryst; the sex scene in the limo is fairly noteworthy. Although Atwell is the mistress of the married Brice, her affair with Farrell continues for several months. Meanwhile Brice has as a chief rival, Senator Duvall (Howard Duff), who wants the Secretary of Defense to approve of the "Phantom Submarine," which is the size of an aircraft carrier. Brice is against the proposed project because the sub's huge size will make it easy for the Soviet Russian enemy to detect.
Knowing that his lover has been with another man, Brice confronts her in the apartment that he has paid for her. In a jealous rage he strikes her so hard that she falls backward over the balcony railing, striking the lower level and breaking her neck. In a panic, Brice calls his devoted servant Pritchard, who masterminds a plan to protect his boss from scandal and pin the crime on someone else. Pritchard's plan is to search for a supposed mole in the Defense Department: a Russian spy sent by the Soviet KGB to America while young and who can pass as a real American. His code name is "Yuri." Pritchard's stratagem is to blame Atwell's death on this fictional lover "Yuri" and thus deflect attention away from the Secretary of Defense. Of course it was Farrell who had just left Atwell's apartment before Brice arrived and killed her. Farrell knows the killer has to be Brice. As Pritchard needs a front man, navy officer Farrell, who performed a heroic act at sea, is chosen. While the CID (Criminal Investigation Division of Army Intelligence) removes items from Atwell's apartment, Farrell is somewhat suspicious as he is ordered to report only to Brice or Pritchard, and to avoid the FBI, CIA, or the Washington Police. In a short time Farrell will realize that the criminal investigation will lead to him as the fall guy. The clues, though untainted, are all stacked against him!
Kevin O'Brien (Leon Russom) of the FBI is suspicious, though, of the motives of the Brice team. When an associate says that Atwell was the mistress of either Brice or Pritchard, O'Brien retorts, "Pritchard is homosexual!" Then Senator Duvall comes into Brice's office to do business on his pet project, the proposed submarine. Pritchard makes a vague promise to him, to get him away. Meanwhile Farrell is convinced of the cover-up. He says to Pritchard that even if "Yuri" exists, he did not murder Atwell! Farrell tries to quit the investigation but is without success. In the denouement, the Brice team has brought two witnesses into the Pentagon building. So, as the workers begin to leave their jobs for the day, all of the exits are sealed except for the main one. The witnesses are on the watch for "Yuri." Once the building has emptied out, it's floor to floor, and room to room. How can Farrell escape? At the very end there is a huge twist that you will not see coming!
Although it is a military setting, "No Way Out" owes much to "The Big Clock" (1948), where magazine journalist Ray Milland is framed by powerful publishing tycoon Charles Laughton for the murder of the latter's mistress. Laughton, like Hackman's Brice, doesn't really know the identity of the innocent man that he is framing. Milland, like Costner, is picked to lead an investigation against himself.
The actors all do well in "No Way Out," with Costner and Patton taking the top honors with their electrifying performances. Filming locations were in Maryland, Virginia, and the District of Columbia. See this movie because it's a good one!