Purely base-based. IIRC, your border will be eight squares from the nearest base, unless another faction is nearby, when it will be halfway between the nearest two opposing bases.
You can edit the alpha.txt or alphax.txt to specify the number of squares away from the base that the borders go. The default is eight, but if you really want 4 or 16, go for it.
Of course, that may or may not help in your specific scenario.
BTW, in case you are unaware, if you place a version of alphax.txt (edited) in the scenarios folder, it uses those settings, not the default ones.