No, it does not. It still has a decent amount of range and will kill anything smaller than a capital ship. It may even be able to take out some low-level capital ships, as well.

If the starbase is in a small gravity well at the front lines, I expect that this ability is worth the cost, especially considering you get that 4,000/8,000 damage free of guilt if the starbase is going to die anyways.

iirc, level 1 they're out of range, level 2 they're in range.  In any case, any fewer than 8 or so Ogrovs or 6 or so Starfish are well worth sacrificing.