While the panel decided against bringing criminal charges, its report criticized father-and-son owners Nahman and Michael Lichtenstein for allowing the dilapidated 19th-century hosiery mill to become "a firetrap," the Philadelphia Inquirer reported.
The grand jury said local agencies, including the city Department of Licenses and Inspections, failed to enforce regulations regarding the property.
"Had city departments done their jobs, these deaths might never have occurred," the grand jurors wrote in a 110-page report.
The Lichtensteins, real estate developers from New York City who did not testify before the grand jury, had been cited for code violations and for failure to secure the property five times in the five months before the April 2012 fire in which Lt. Robert Neary and firefighter Daniel Sweeney were killed, the newspaper said.
Prosecutor Seth Williams said he was "frustrated" by the grand jury's decision, but acknowledged it would have been a hard case to win, given the cause of the blaze was undetermined.
"We can't just charge people because we have a bad taste in our mouths or we're angry," he said. "We are bound by the law."
Firefighters local President Joe Schulle expressed disappointment and anger at the lack of an indictment, but declined to comment further until he had a chance to review the report.