O3: MCP & Tools

An LLM without tools is a brain in a jar — it can reason but can't act. Tools give AI models the ability to read databases, call APIs, execute code, and interact with the real world. This module covers the evolution from function calling to the Model Context Protocol (MCP) and Agent-to-Agent (A2A) protocol. For how agents orchestrate tools, see O2: AI Agents Deep Dive. For the orchestration layer managing tool calls, see O1: Semantic Kernel.

Why Tools Matter

Without Tools	With Tools
"The weather in Paris is usually mild" (hallucinated guess)	`get_weather("Paris")` → "Paris is 18°C and sunny right now" (real data)
"I think the stock price is around $150"	`get_stock("MSFT")` → "$421.53 as of market close"
"Here's how to send an email..." (instructions only)	`send_email(to, subject, body)` → "Email sent ✅"

Tools transform LLMs from know-it-alls into do-it-alls.

Function Calling: The Foundation

Function calling is the mechanism where the model generates structured JSON describing which tool to call and with what arguments. Your application then executes the function and returns results.

import openai

tools = [{
    "type": "function",
    "function": {
        "name": "get_weather",
        "description": "Get current weather for a city",
        "parameters": {
            "type": "object",
            "properties": {
                "city": {"type": "string", "description": "City name"},
                "units": {"type": "string", "enum": ["celsius", "fahrenheit"]}
            },
            "required": ["city"]
        }
    }
}]

response = openai.chat.completions.create(
    model="gpt-4o",
    messages=[{"role": "user", "content": "Weather in Paris?"}],
    tools=tools
)
# Model returns tool_call JSON (NOT the result) — your app executes the function
# {"name": "get_weather", "arguments": {"city": "Paris", "units": "celsius"}}

:::info Key insight The model never executes the function — it only generates the JSON call. Your application is the executor. This is a critical security boundary. :::

Tool Definition Schema

Every tool needs three things:

{
  "name": "search_knowledge_base",
  "description": "Search internal docs for relevant information. Use when the user asks about company policies or procedures.",
  "parameters": {
    "type": "object",
    "properties": {
      "query": { "type": "string", "description": "Search query" },
      "top_k": { "type": "integer", "description": "Number of results", "default": 5 }
    },
    "required": ["query"]
  }
}

The description is the most important field — it's what the model reads to decide when to use the tool. Write it like you're explaining to a new team member.

Tool Choice Control

`tool_choice`	Behavior	Use Case
`"auto"`	Model decides whether to call a tool	Default — let the model reason
`"none"`	Model cannot call any tools	Force text-only response
`"required"`	Model must call at least one tool	Ensure action is taken
`{"function": {"name": "X"}}`	Model must call specific function X	Force a particular tool

Parallel Tool Calling

Models can request multiple tool calls in a single turn when tasks are independent:

User: "What's the weather in Paris and Tokyo?"
Model: [get_weather("Paris"), get_weather("Tokyo")]  ← Two parallel calls

Execute them concurrently and return both results. This reduces round trips and latency.

Model Context Protocol (MCP)

:::tip The "USB for AI" Analogy Before USB, every device needed a custom cable. MCP does for AI tools what USB did for peripherals — one standard protocol for connecting any tool to any AI application. :::

MCP vs Function Calling

Dimension	Function Calling	MCP
Discovery	Manual — hardcode tools per app	Automatic — client discovers tools from server
Scope	Per-application	Shared across applications
Updates	Redeploy app to add tools	Server adds tools, clients auto-discover
Ecosystem	Vendor-specific (OpenAI, Anthropic)	Open standard, any vendor
Data access	Tools only	Tools + Resources + Prompts

MCP Architecture

┌──────────────┐         ┌──────────────┐
│   AI App     │         │  MCP Server  │
│  (Client)    │◄───────►│              │
│              │  JSON   │  ☐ Tools     │
│  Claude      │  -RPC   │  ☐ Resources │
│  Copilot     │         │  ☐ Prompts   │
│  Custom App  │         │              │
└──────────────┘         └──────────────┘

MCP servers expose three capability types:

Capability	What It Is	Example
Tools	Functions the model can call	`search_docs`, `create_ticket`, `run_query`
Resources	Read-only data the model can access	File contents, database schemas, config values
Prompts	Reusable prompt templates	"Summarize this document", "Review this PR"

MCP Transport

Transport	How It Works	Best For
stdio	Server runs as child process, communicates via stdin/stdout	Local tools (VS Code, CLI)
HTTP/SSE	Server runs remotely, uses HTTP + Server-Sent Events	Remote/shared servers, cloud deployment

MCP Server Example

import { McpServer } from "@modelcontextprotocol/sdk/server/mcp.js";
import { StdioServerTransport } from "@modelcontextprotocol/sdk/server/stdio.js";

const server = new McpServer({ name: "weather-server", version: "1.0.0" });

// Register a tool
server.tool("get_weather", { city: { type: "string" } }, async ({ city }) => {
  const data = await fetch(`https://api.weather.com/${city}`);
  return { content: [{ type: "text", text: JSON.stringify(data) }] };
});

// Start server
const transport = new StdioServerTransport();
await server.connect(transport);

A2A: Agent-to-Agent Protocol

While MCP connects models to tools, A2A connects agents to other agents:

Protocol	Connects	Purpose
MCP	Model ↔ Tool	Tool discovery and execution
A2A	Agent ↔ Agent	Task delegation between autonomous agents

A2A enables an agent to discover other agents' capabilities, delegate subtasks, and receive results — without knowing the other agent's implementation.

Security Best Practices

warning

Tools are the most dangerous part of an AI system. An LLM with unrestricted tool access can delete databases, send emails, or exfiltrate data.

Practice	Implementation
Least privilege	Each tool gets minimum required permissions
Sandboxing	Code execution tools run in containers
Rate limiting	Max N tool calls per minute per user
Audit logging	Log every tool call with user, args, result
Input validation	Validate all tool arguments before execution
Confirmation gates	Destructive actions require human approval
Timeout	Kill tool calls exceeding 30s

Key Takeaways

Function calling is the foundation — model generates JSON, your app executes
Tool descriptions are critical — they guide the model's tool selection decisions
MCP standardizes tool discovery and sharing across AI applications
MCP exposes Tools + Resources + Prompts via stdio or HTTP/SSE transport
A2A extends the pattern from model↔tool to agent↔agent delegation
Security is non-negotiable: sandbox, rate-limit, audit, and gate every tool

For how agents use these tools in autonomous loops, see O2: AI Agents Deep Dive. For Azure-native deployment of tool-using AI, see O4: Azure AI Foundry.

Why Tools Matter​

Function Calling: The Foundation​

Tool Definition Schema​

Tool Choice Control​

Parallel Tool Calling​

Model Context Protocol (MCP)​

MCP vs Function Calling​

MCP Architecture​

MCP Transport​

MCP Server Example​

A2A: Agent-to-Agent Protocol​

Security Best Practices​

Key Takeaways​