Consider the payoff matrix in this example, somewhat analogous to the case we're describing:
- Both defect -> both go to prison for life
- One defects, one cooperates -> the cooperating one goes to prison for life; the defector gets some minor punishment and otherwise goes free.
- Both cooperate -> both go free for a moment, spend some months or maybe even a few years living in fear, then with 95% chance go to prison for life. That's because the whole deal is about saving work for the Feds, but they will put in that work if needed, and come back with bullet-proof case.
There's hardly anything they can do to meaningfully increase their chances of surviving the "both cooperate" option, so the two prisoners will both try to defect.