The Dominion is big enough without them. Plus Orcs are a minority in every province. The only reason why they are a part of the Daggerfall Covenant is because they live in that general area. Their allies only gave them two options. It was either assimilate or annihilate. Orcs can't take on two badass races. Also consider this; Game Developers needed at least three races within the three factions. Imperials couldn't work because of reasons.
Dunmer and Argonians don't just have a bad history because the Dark Elves enslaved the Argonians, both races have attacked each other multiple times.
Also, the Orcs kingdom is too far away from Summerset Isles to establish a solid trade route or communication lines. Siding with neighboring provinces is much safer for both alliances.