In a face-to-face situation as the one you describe there are really no rules to how it needs to be done.
Also it is important to note that the bid does not (and often isn’t) evenly split among the Axis so most of the time Germany will get most of the bid. Not always but it just works out that way.
There are probably several ways you can do
One would be an Auction style:
Player 1: I’ll play the Axis with 12 extra ipc
Player 2: I’ll play the Axis with 11
Player 3: I’ll play the Axis with 8
At some point the players will stop and the guy left with the Axis then picks his country, and however you chose the rest can be random draw or just take the next lowest bidder or something.
Another sytle would be a blind bid where you all write down how many extra ipcs you want to play the Axis.
Then yes lowest 2 could be the Axis taking the lowest amount.
In case of ties flip a coin (or random draw from the set up charts).
You can really do anything you want as long as you all agree before hand.
You can even all agree to a “fair” bid amount (example 6 ipc) and then random draw countries from there.
On-line play is different.
Certain clubs have different Rules.
Here (A&A org) we have no placement restrictions and blind binding (ties broken randomly). We use Frood (an A&A dice calculator site) to submit bids and get results via email.
Other Clubs use what is called a FIDA bid, which is the bid is split between half units and half cash. So a 12 bid would be like 2 inf placed anywhere and 6 ipc to be split between Ger and Japan.
IIRC, the Triple A Ladder uses a 9 bid with a limit of 1 unit per ter.
Hope this helps. But you are kind of free to do whatever you want.
The important thing is to make sure everyone has a fun game, well at least until one side loses or the dice smite some poor country.