The steel saw is a weaker version of the auto axe, dealing roughly half as much damage. It appears to be a modified concrete cutter or concrete saw, with a rotating metal blade. Slaves use the steel saw for cutting through metal objects. However, this does not translate to an in-game damage bonus against robots.
PCPlaystation 3 Sometimes, the saw will not show in first person at all, making it very hard to tell where you're hitting. [verified]
↑Fallout 3 Official Game Guide Game Of The Year Edition p. 118: "The standard equipment used by most Pitt Slaves to cut metal. It can also cut skin and bone, so it is useful in a pinch but is superseded by the far more powerful Auto Axe. Collect and use this weapon as spare parts to repair any Auto Axes you are collecting. As each weapon looks identical, don’t forget to equip the right one!"