"Had city departments done their jobs, these deaths might never have occurred," the report said. "They created paper, but no results."
The Lichtensteins, father and son real estate developers from New York City, had been cited seven times for code violations and for failure to secure the property, including five times in the five months before the April 2012 fire.
Past and present L&I commissioners described to the grand jury a "reluctance" to take the owners of large industrial properties to court because of limited resources.
"If the property owner doesn't take action, then the city has the burden of that responsibility," Commissioner Carlton Williams told the grand jury, according to the report. He was not commissioner at the time of the fire.
"From what we know, the bureaucrats at L&I were guilty of indifference, not crime," the report said. "The Lichtensteins were a closer call."
One major hurdle to filing charges: The cause of the fire was never determined. Investigators ruled out everything except a "human origin," but did not detect any accelerants.
"We can't just charge people because we have a bad taste in our mouths or we're angry," District Attorney Seth Williams said Monday at a news conference. "We are bound by the law."
He said he hoped the grand jury report would spur reform at L&I, an agency also under scrutiny in the collapse last summer at a demolition site on Market Street where six people were killed. A separate grand jury is probing that tragedy.
Mayor Nutter is attending a conference this week in South Africa. His chief of staff, Everett Gillison, said the administration was reviewing the report and would comment further "in the days to come."
He said the administration was committed to "continuous improvement" of city services and noted that a special commission - impaneled after the fatal collapse last June - was reviewing L&I practices and policies.
The district attorney's decision not to seek charges dismayed the firefighters' union, which plans to "assail" Williams at a Tuesday news conference.
Joe Schulle, president of Local 22 of the firefighters' union, said Monday that he was "deeply disappointed and angry" at the decision, but withheld further comment until Tuesday.
Families of the two firefighters killed - Lt. Robert Neary, 59, and Daniel Sweeney, 25 - also planned to speak Tuesday, according to a spokesman for the union.
The families appeared last week in City Hall when City Councilman Dennis O'Brien introduced legislation calling for a vacant property task force.
Neary's widow, Diane, said the block-size empty lot left on York Street "represents, to me, the vacantness in my life."
Diane Neary sued the Lichtensteins in Common Pleas Court last year. The suit is pending.
The Lichtensteins, who still own the lot where the hosiery building stood, invoked their rights not to testify before the grand jury.
Attorney Stephen A. Cozen, who is defending the Lichtensteins in the civil suit, said he "would take issue with any inference that [the Lichtensteins] conducted themselves negligently in any way."
"They took all prudent and reasonable steps to protect the building and their investment in it," Cozen said in an e-mail. "We all feel great pain at the loss of good men who arrived at the fire scene long after the building was engulfed in flame and a perimeter attack was underway."
Neary and Sweeney were killed and two other firefighters injured when one of the hosiery building's walls collapsed onto an adjacent furniture store.
The main fire had been declared under control about 30 minutes earlier, but flames had spread for a second time that morning to the furniture store.
A "collapse zone" had been established to keep firefighters out of danger from falling debris.
Commanders at the scene told the grand jury they did not know members of Ladder 10 had entered the furniture store, breaching the collapse zone to fight the fire there.
One of the surviving firefighters, Francis Cheney, told the grand jurors that it would have been "catastrophic" to let the fire spread inside the store, which fronts Kensington Avenue and SEPTA's Market-Frankford Line.
"They died because they were brave: Instead of retreating from a dangerous collapse zone, they entered into it," the grand jurors said. "But it takes nothing away from their bravery to say that perhaps someone should have stopped them."