• Represents continued market-leading success in penetrating the Fujitsu ICL mainframe market
• Contract in close cooperation with one of the largest global system integrators
• Implementation will enable an enterprise data warehouse, yielding far reaching benefits through the smarter use of data, such as increasing efficiencies

HERZLIYA, Israel – February 5, 2008 — BluePhoenix Solutions (NASDAQ: BPHX), the leader in value-driven legacy modernization, today announced that it has won a major contract valued at around $4 million with a UK Government Department. The contract was signed with one of the leading global system integrators.

Organizations that have mission critical systems running on Fujitsu ICL mainframes are facing growing risks and costs. Diminishing availability of tools and resources are compelling many companies to modernize this aging platform. Many Fujitsu ICL systems have been in place for over 25 years.

BluePhoenix’s market-leading solution for Fujitsu ICL includes a highly automated toolset that migrates data stores from IDMSX to Oracle, SQL Server or DB2. In addition, our solutions enable Fujitsu ICL applications to be modernized to.Net, UNIX or Linux platforms. These projects are often complex due to the age and size of the typical Fujitsu ICL application. BluePhoenix’s tools will be used to modernize the Department’s data stores from IDMSX on the Fujitsu ICL mainframe to Oracle running on Sun UNIX, and to perform daily synchronization. The major goal of the project is to streamline management of information and increase efficiencies.

“This contract represents another large win for BluePhoenix in the government vertical and around the Fujitsu ICL mainframe computing platform,” said Arik Kilman, CEO of BluePhoenix. “BluePhoenix offers ICL customers reliable, low-risk and cost-effective modernization providing a combination of technology, expertise and services. We have proven experience in this area with excellent references.”

Fujitsu ICL computers can be found in leading UK public sector organizations, military and defense and large financial institutions. For more information about ICL/IDMS modernization, download the IDMS migration fact sheet or visit VME Migration.

About BluePhoenix Solutions (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 Informáticos, 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. This press release is also available at www.bphx.com. All names and trademarks are their owners' property.

Company Contact           Investor Contact
David Leichner            Paul Holm
BluePhoenix Solutions     H.L. Lanzet
+9729 9526110             +1 212-888-4570
dleichner@bphx.com        paulmholm@gmail.com