I was hunting down the spy, waited for them to meet, groups didnt combine or anything, so i killed the 7 strong group using blunt only, captured the contact, then had to fight the spy, same weapon, knocked him out, completed fight, and he wasnt available to capture him, that screen never even came up, just loot choices and then back to world map. Going to attempt to replicate, see if it was just bad luck or something.
