Do they ever give sentence reductions in federal prisons?

Yes, there is a program called RDAP (Residential Drug Abuse Program), that if qualified will cut one year (plus a guaranteed 6 months of halfway house) off the inmate's sentence. There are other opportunities which require substantial assistance in helping authorities prosecute other crimes. Inmate's reward is a sentence reduction (AKA snitching, but it's effective). Also, there have been recent changes to the sentencing guidelines for non-violent drug crimes. When an inmate's profile fits the new guideline, there could be downward point grade for the crime, therefore the actual sentence is reduced.