Project to Increase Resource and Manpower Availability, Cut Costs and

                Enable Development of Enhanced Functionality

 Database and Application Technology to be Migrated Include ADABAS/Natural,

VSAM/COBOL, JCL, Assembler, CLIST, SuperWylbur, PL/I, CA Easytrieve and SAS

                        to a Java/Oracle Environment

    Project Estimated at $1.1 Million and Expected to Take 15 Months to

                                 Implement



    CARY, North Carolina, July 23 /EMWNews/ -- BluePhoenix

Solutions (NASDAQ: BPHX), the leader in value-driven legacy modernization,

today announced that following a successful global assessment of the

systems at the U.S. Department of Energy, it has won a major project

estimated at $1.1 million to migrate and modernize several key applications

and databases to the Java/Oracle environment. The legacy technology

includes ADABAS/Natural, VSAM/COBOL, JCL, Assembler, CLIST, SuperWylbur,

PL/I, CA Easytrieve and SAS. This project will be executed in conjunction

with BluePhoenix partner EES (Energy Enterprise Solutions), to whom

BluePhoenix is serving as subcontractor.



    The Department of Energy's overarching mission is to advance the

national, economic, and energy security of the United States; to promote

scientific and technological innovation in support of that mission; and to

ensure the environmental cleanup of the national nuclear weapons complex.



    Working in conjunction with EES (Energy Enterprise Solutions), a

leading provider of solutions to the Department of Energy, BluePhoenix's

automated migration tools and services will be used to perform the

migration, transformation, testing and enhancement to the modernized

databases and applications.



    "We are very comfortable with our initial experience of working with

BluePhoenix through the global assessment and into the initial stages of

the migration effort," said Bill Underwood, CIO and Director of Office of

Information Technology, Department of Energy / Energy Information

Administration. "We look forward to leveraging the benefits of modern

technology with the reduced risk and timeframes that BluePhoenix can

provide."



    According to a recent study entitled "Government and IT Modernization"

from Gartner, Inc., factors such as skill gaps, budget cuts, complexity and

age of IT systems have a direct impact on government IT departments'

assets, services and management practices. Gartner notes that "During the

next 5 to 10 years, the retirement of baby boomers will create gaps in

skills required to upgrade and maintain legacy mainframe-based systems that

are poorly documented and dependent on vanishing programmers."



    "This project represents our continued support and commitment to the

federal government in their quest to secure a safe, rapid, economic

migration path for their legacy databases and applications," said Arik

Kilman, CEO of BluePhoenix. "Given the amount of legacy systems that can be

found in all areas of government, we see this as an excellent market for

growth in the coming years."

    About BluePhoenix Solutions (http://www.bphx.com)



    BluePhoenix Solutions (NASDAQ: BPHX) is a leading provider of

value-driven modernization solutions for legacy information systems.

BluePhoenix offerings include a comprehensive suite of tools and services

from global IT asset assessment and impact analysis to automated database

and application migration, rehosting, and renewal. Leveraging over 20 years

of best-practice domain expertise, BluePhoenix works closely with its

customers to ascertain which assets should be migrated, redeveloped, or

wrapped for reuse as services or business processes, to protect and

increase the value of their business applications and legacy systems with

minimized risk and downtime.



    BluePhoenix provides modernization solutions to companies from diverse

industries and vertical markets such as automotive, banking and financial

services, insurance, manufacturing and retail. Among its prestigious

customers are: Aflac, Citigroup, DaimlerChrysler, Danish Commerce and

Companies Agency, Lawson Products, Los Angeles County Employees Retirement

Association, Merrill Lynch, Rabobank, Rural Servicios Informaticos, SDC

Udvikling, and TEMENOS. BluePhoenix has 15 offices in the USA, UK, Denmark,

Germany, Italy, France, The Netherlands, Romania, Russia, Cyprus, South

Korea, Australia, and Israel.



    SAFE HARBOR: Certain statements contained in this release may be deemed

forward-looking statements, with respect to plans, projections, or future

performance of the Company, the occurrence of which involves certain risks

and uncertainties that could cause actual plans to differ materially from

these statements. These risks and uncertainties include but are not limited

to: market demand for the Company's tools, successful implementation of the

Company's tools, competitive factors, the ability to manage the Company's

growth, the ability to recruit and retrain additional software personnel,

and the ability to develop new business lines. All names and trademarks are

their owners' property.






    BluePhoenix Contact

    Colleen Pence

    +1-210-408-0212, ext. 600

    [email protected]



    Investor Contact                Financial Media Contact

    Peter Seltzberg                 Jeffrey Stanlis

    Hayden Communications           Hayden Communications

    +1-(646)415-8972                +1-(602)476-1821

    [email protected]              [email protected]