@inproceedings{hathidara-etal-2026-toolsense,
title = "{T}ool{S}ense: A Diagnostic Framework for Auditing Parametric Tool Knowledge in {LLM}s",
author = "Hathidara, Ashutosh and
Sistla, Sai Shruthi and
Schreiber, Sebastian and
Bansal, Sahil",
editor = "Lee, Hung-Yi and
Dev, Sunipa and
Li, Jessy and
Elliott, Desmond",
booktitle = "Findings of the {A}ssociation for {C}omputational {L}inguistics: {EMNLP} 2026",
month = oct,
year = "2026",
address = "Budapest, Hungary",
publisher = "Association for Computational Linguistics",
url = "https://aclanthology.org/2026.findings-emnlp.370/",
pages = "7775--7797",
ISBN = "979-8-89176-462-0",
abstract = "Large language models deployed as agents over large tool catalogs face a critical tool-retrieval bottleneck. As embedding-based retrieval approaches rely on compact encoders that may under-capture specialized tool semantics, parametric tool retrieval addresses this by encoding each tool as a virtual token appended to the LLM vocabulary, fine-tuned in two stages (memorization then retrieval SFT) to use the LLM as a retriever, achieving strong performance on standard ToolBench retrieval benchmarks. Yet these benchmarks use verbose, fully-specified queries, and their evaluation applies constrained decoding that restricts outputs to valid token paths - neither reveals whether the model actually understands its tools. We introduce **ToolSense**, an open-source LLM-powered diagnostic framework that takes any tool catalog as input and automatically generates three benchmarks: a Realistic Retrieval Benchmark (RRB) with queries at three ambiguity tiers, an MCQ probing benchmark, and a QA probing benchmark. Applying ToolSense to ToolBench{~}($\sim$47k tools) and evaluating five parametric model training configurations reveals a knowledge-retrieval dissociation: on RRB queries, several configurations collapse by $\sim$**50-64 percentage points** compared to fully-specified ToolBench benchmarks, falling below embedding-model baseline. Additionally, despite strong retrieval performance, some models score near-random on factual probes, suggesting a knowledge-retrieval dissociation. We open-source the ToolSense framework and the ToolBench diagnostic benchmarks to encourage further research. (see supplementary material)"
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<abstract>Large language models deployed as agents over large tool catalogs face a critical tool-retrieval bottleneck. As embedding-based retrieval approaches rely on compact encoders that may under-capture specialized tool semantics, parametric tool retrieval addresses this by encoding each tool as a virtual token appended to the LLM vocabulary, fine-tuned in two stages (memorization then retrieval SFT) to use the LLM as a retriever, achieving strong performance on standard ToolBench retrieval benchmarks. Yet these benchmarks use verbose, fully-specified queries, and their evaluation applies constrained decoding that restricts outputs to valid token paths - neither reveals whether the model actually understands its tools. We introduce **ToolSense**, an open-source LLM-powered diagnostic framework that takes any tool catalog as input and automatically generates three benchmarks: a Realistic Retrieval Benchmark (RRB) with queries at three ambiguity tiers, an MCQ probing benchmark, and a QA probing benchmark. Applying ToolSense to ToolBench (\sim47k tools) and evaluating five parametric model training configurations reveals a knowledge-retrieval dissociation: on RRB queries, several configurations collapse by \sim**50-64 percentage points** compared to fully-specified ToolBench benchmarks, falling below embedding-model baseline. Additionally, despite strong retrieval performance, some models score near-random on factual probes, suggesting a knowledge-retrieval dissociation. We open-source the ToolSense framework and the ToolBench diagnostic benchmarks to encourage further research. (see supplementary material)</abstract>
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%0 Conference Proceedings
%T ToolSense: A Diagnostic Framework for Auditing Parametric Tool Knowledge in LLMs
%A Hathidara, Ashutosh
%A Sistla, Sai Shruthi
%A Schreiber, Sebastian
%A Bansal, Sahil
%Y Lee, Hung-Yi
%Y Dev, Sunipa
%Y Li, Jessy
%Y Elliott, Desmond
%S Findings of the Association for Computational Linguistics: EMNLP 2026
%D 2026
%8 October
%I Association for Computational Linguistics
%C Budapest, Hungary
%@ 979-8-89176-462-0
%F hathidara-etal-2026-toolsense
%X Large language models deployed as agents over large tool catalogs face a critical tool-retrieval bottleneck. As embedding-based retrieval approaches rely on compact encoders that may under-capture specialized tool semantics, parametric tool retrieval addresses this by encoding each tool as a virtual token appended to the LLM vocabulary, fine-tuned in two stages (memorization then retrieval SFT) to use the LLM as a retriever, achieving strong performance on standard ToolBench retrieval benchmarks. Yet these benchmarks use verbose, fully-specified queries, and their evaluation applies constrained decoding that restricts outputs to valid token paths - neither reveals whether the model actually understands its tools. We introduce **ToolSense**, an open-source LLM-powered diagnostic framework that takes any tool catalog as input and automatically generates three benchmarks: a Realistic Retrieval Benchmark (RRB) with queries at three ambiguity tiers, an MCQ probing benchmark, and a QA probing benchmark. Applying ToolSense to ToolBench (\sim47k tools) and evaluating five parametric model training configurations reveals a knowledge-retrieval dissociation: on RRB queries, several configurations collapse by \sim**50-64 percentage points** compared to fully-specified ToolBench benchmarks, falling below embedding-model baseline. Additionally, despite strong retrieval performance, some models score near-random on factual probes, suggesting a knowledge-retrieval dissociation. We open-source the ToolSense framework and the ToolBench diagnostic benchmarks to encourage further research. (see supplementary material)
%U https://aclanthology.org/2026.findings-emnlp.370/
%P 7775-7797
Markdown (Informal)
[ToolSense: A Diagnostic Framework for Auditing Parametric Tool Knowledge in LLMs](https://aclanthology.org/2026.findings-emnlp.370/) (Hathidara et al., Findings 2026)
ACL