ToolSense: A Diagnostic Framework for Auditing Parametric Tool Knowledge in LLMs

Large language model agents derive much of their capability from tool use. Existing research on tool use has largely focused on selecting the right tool and orchestrating the order of calls. However, correctly filling the parameters of a tool call is equally critical for successful execution and has received far less attention. In domains such as cloud networking, even frontier models correctly complete fewer than half of tool calls. Inspired by recent analyses showing that LLM hidden states encode rich information about model predictions, we discover that while the model generates a parameter value, its hidden state contains a strong correctness signal: a simple linear probe can accurately predict whether the value will be correct. Based on this observation, we propose a unified probe-guided framework with two complementary approaches: probe-filtered bootstrapped training (PBT), which uses the probe to filter reliable self-generated calls for fine-tuning, and probe-guided reranking (PGR), which uses the probe to select better candidates during inference. To support systematic evaluation, we release ParamBench, a benchmark built from real cloud-network APIs that categorizes every instance into five difficulty levels according to parameter nesting depth, cross-parameter dependencies, and the reasoning required to derive values from earlier calls. Extensive experiments across 5 open models on ParamBench and 6 external benchmarks demonstrate that our method substantially improves parameter generation, raising the average exact match from 19.7% to 59.6%.

Tool calling is central to modern language model agents, but aggregate benchmark scores often hide where tool use fails. A model that never calls a needed tool and a model that calls the tool but ignores the result can look similar under final task accuracy. We introduce ToolFailBench, a diagnostic benchmark for measuring tool-use failures across 1,000 tasks in finance, medicine, law, cybersecurity, and real estate. Tool-required tasks return values the model wouldn't guess, forcing it to trust the tool while control tasks attach the same tools but should be answered directly. We label each trace with Tool-Skip, Result-Ignore, Output-Fabrication, and Unnecessary-Tool-Use, using a rule classifier and two LLM judges aggregated by majority vote. Across 19 headline models, the best reaches 86.33% Clean Tool-Use Rate, showing that faithful tool use is not saturated. More importantly, models with similar aggregate scores fail in different ways: most stay disciplined on no-tool controls, while Llama-3.1 models show an Always-Call pattern, and at the same parameter scale Llama-3.1-70B and Qwen2.5-72B differ by 89 percentage points on control-task accuracy. Tool-use evaluation should measure not only whether agents call tools, but whether they use tool outputs correctly and avoid tools when none is needed.

Tool-augmented LLM agents tend to call tools indiscriminately, even when the model can answer directly. Each unnecessary call wastes API fees and latency, yet no existing benchmark systematically studies when a tool call is actually needed. We propose When2Tool, a benchmark of 18 environments (15 single-hop, 3 multi-hop) spanning three categories of tool necessity -- computational scale, knowledge boundaries, and execution reliability -- each with controlled difficulty levels that create a clear decision boundary between tool-necessary and tool-unnecessary tasks. We evaluate two families of training-free baselines: Prompt-only (varying the prompt to discourage unnecessary calls) and Reason-then-Act (requiring the model to reason about tool necessity before acting). Both provide limited control: Prompt-only suppresses necessary calls alongside unnecessary ones, and Reason-then-Act still incurs a disproportionate accuracy cost on hard tasks. To understand why these baselines fail, we probe the models' hidden states and find that tool necessity is linearly decodable from the pre-generation representation with AUROC 0.89--0.96 across six models, substantially exceeding the model's own verbalized reasoning. This reveals that models already know when tools are needed, but fail to act on this knowledge during generation. Building on this finding, we propose Probe&Prefill, which uses a lightweight linear probe to read the hidden-state signal and prefills the model's response with a steering sentence. Across all models tested, Probe&Prefill reduces tool calls by 48% with only 1.7% accuracy loss, while the best baseline at comparable accuracy only reduces 6% of tool calls, or achieves a similar tool call reduction but incurs a 5$\times$ higher accuracy loss. Our code is available at https://github.com/Trustworthy-ML-Lab/when2tool