Gary Schultz and Tim Curley are challenging allegations they didn't respond properly nine years ago to a report that a young boy had been sodomized in the football team's showers.
Both men were arrested six weeks ago. A judge will determine if their cases should go to county court for trial.
Mike McQueary, a Penn State assistant football coach, testified Friday that he believes he saw Sandusky molesting a boy in a campus locker room and that he conveyed what he had seen to Schultz and Curley.
"I told them that I saw Jerry in the showers with a young boy and that what I had seen was extremely sexual and over the lines and it was wrong," McQueary said. "I would have described that it was extremely sexual and I thought that some kind of intercourse was going on."
In about two hours on the witness stand, McQueary said again and again that what he saw was a sexual act, although he stopped short of saying he was sure that Sandusky, now 67, had raped the boy.
"I believe Jerry was sexually molesting him and having some type of sexual intercourse with him," McQueary said on Friday. He said later he "can't say 100 percent" that Sandusky and the boy were having intercourse because he was seeing Sandusky from behind.
McQueary's story is central to the case against Curley and Schultz. They testified to the grand jury that McQueary never relayed the seriousness of what he saw.
The officials, and Penn State coach Joe Paterno, have been criticized for never telling police about the 2002 allegation.
Sandusky says he is innocent of more than 50 charges stemming from what authorities say were sexual assaults over 12 years on 10 boys.
Schultz, the school's former vice president, has since retired, and Curley, Penn State's athletic director, is on administrative leave.
The Associated Press contributed to this story.