Need some advice

My grandfather has an older dog that has a very bad habit of growling and nipping at people. It usually happens when he is sitting next to my grandfather or someone approaches him too quickly. The dog has never broken skin that I am aware of. But there has been too many instances where my kids have been bit. Thankafukky, it's not hard but it has been unprovoked, meaning my kids do nothing intentionally to anger him. Kids are not his only "victims". My mom has been nipped at, my aunt, myself, etc. it's really making me upset that anytime this happen, my grandfather does little to discipline his dog. He lightly touches his nose and says either "no" or "stop it". I addressed my concern and how BJ, the dog, needs to stay away from my kids if he is going to do that. My grandfather, in turn, stated my kids just need to go into the other room then; that BJ is his baby and that he will not discipline him or leave him outside ( I never said leave him outside). I just want my kids protected. Let me just say that I know it is also my job to protect my kids. If I can get to it quick enough, I most certainly keep it from happening. The problem is 95% of the time, this happens when BJ is in my grandfather's lap and the kids go over to see my grandfather. BJ is "protective" of him and my grandfather keeps allowing his bad behavior. 

I don't want to have to get to the point where I can't bring my kids over anymore because this won't get fixed. What would you do in my situation?