"It does reach the point where you can't sleep at night," said Rick Peoples.
"With the things going on in Afghanistan, this has been on my conscience for a long time," admitted Doug Smith.
Doug Smith and Rick Peoples worked on batteries that power the guidance systems of almost every U.S. smart weapon.
Peoples, a production engineer, says supervisors ordered him to ship out defective batteries because discarding them would have cost the company hundreds of thousands of dollars.
"They threatened me several times with my check if I would not sign off on battery lots that had actually failed," said Peoples.
Smith worked at the plant's testing lab where he says technicians were told to falsify tests and get rid of bad results.
"I was shown how to delete the information from the computer disks," he said.
He claims software and equipment were rigged and inspectors deceived by faked tests.
"I was quite amazed when I saw the computer actually showing voltage and current and no battery being hooked up."
Pentagon officials and smart bomb makers refused to talk. But a former Air Force Chief of Staff says this can't be ignored.
"It's such a key component because once they depart the aircraft and begin their trajectory to the ground, they are totally reliant on this battery," said Gen. Ronald Fogleman, USAF(ret.).
"I went to every single manager at Eagle-Picher and talked to them about their processes, the falsifying of battery test data, the failures that were going out the door and I got results from no one," said Peoples.
A former Marine, Peoples says he was fired for speaking out and filed a whistle-blower suit. Eagle-Picher says he was "terminated because he failed to perform to management expectations." The company says there is no evidence to back up his allegations and they say the batteries work.
CBS News spoke to other Eagle-Picher employees who confirmed a number of the allegations. They couldn't talk on camera because the company paid them thousands of dollars to sign documents in which they promised to stay silent. A deal the company also offered to Rick Peoples.
In exchange for $10,000, he, like the others, was to drop any claims "regarding his employment relationship." They all believe that was meant to prevent them from talking about the alleged cover up.
"They can't, they couldn't buy my integrity and where they ever got the idea they could, I have no idea," said Peoples.
A government investigation produced no charges, but sources said the probe was hampered by company lawyers who instructed employees not to answer certain questions. And now top Pentagon officials, and congressional investigators, say they will be looking into these allegations.
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