Is there a way to keep a K9 service dog sharp for work, yet be sociable with family members?

Hi there:

I would like to get your opinion on the issue of my dog biting. I am a dog handler for a security company and have a four year old, unneutered, German Shepherd ( who is my K9 partner). I have been handling and training him for about a year and a half now. His obedience is good as well as him protection work. He is not Sch titled. He comes from excellent lines, but is somewhat "sharp". He has in the past suddenly gone after several people. What the provocation was on those occasions - I don't know. I have been working on his prey drive a lot and I don't know if that is the cause. It starts off almost as playing and then quickly escalates into biting. I probably make the situation worse by getting excited when this happens with a family member or friend. (I don't have the same problem when he is biting the bad guy.)

The situation is as follows: I went out of town for a few days and my wife took the dog to her mothers home while I was gone (I know- this was the biggest mistake). But the dog has been there many times without issue - he has been friendly with all of the family members. When guests arrive, my wife will put the dog away in the truck (with an enclosed canopy). While my wife was putting the dog away, one of her niece's startled the dog. The niece thought this was funny and may have intentionally startled the dog a second time. The dog then managed to get away form my wife, jumped out of the pick up truck and went after the niece. She was bitten several times before my wife could get the dog to out. There has never been an issue between the dog and the niece before and she was able to play with him without problem in the past.

I understand he has been trained to be aggressive, and that as a working dog his personality has to reflect that.

My question is:

1. Is there a balance that can be achieved between keeping the dog sharp for work, and sociable with family? If so, where do I start? Can he recognize family members and not be aggressive with them?
2. Or does it have to be one or the other?
3. If required, can I retrain the dog (or de-train) to be just sociable as a family pet?

I realize you will probably say "this is a dog handler problem - not a dog problem."

I appreciate your time and look forward to your response.